Ladies and gentlemen, good day and welcome to DOMS Industries Q3 FY 2026 earnings conference call 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 discussion during the call, contains or may contain certain forward-looking statements concerning DOMS Industries Limited business prospect and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. As a reminder, all participants' line 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 star, then zero on your 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.
Yeah, thanks, Ikra. On behalf of ICICI Securities, we welcome you all to Q3 and nine- months FY 2026 results conference call of DOMS Industries Limited. We have with us today senior management represented by Mr. Rahul Shah, Chief Financial Officer. Now I hand over the call to Rahul bhai for his initial comments on the quarterly as well as nine months performance, and then we will open the floor for question- and- answer session. Thanks, and over to you, Rahul bhai.
Thank you, Aniruddha bhai. Good evening, and a very warm welcome to everyone to the conference call for Q3 and nine months FY 2026. Joining me on this call is the team from Marathon Capital, our investor relations advisor. I hope everyone had an opportunity to go through the investor presentation and the results released that have been uploaded on the exchanges and our company's website. To begin with, let me take you through the highlights for Q3 and nine months performance. Our Q3 results showcased the strength of our balanced growth strategy, systematic execution, and innovation-driven new product launches, demonstrating our focus on strengthening our market presence. On a year-on-year basis, we delivered a consolidated sales growth of 18.2% driven by strong performances in our core categories.
Our nine-month consolidated growth of 22.7% positions us to close the fiscal year at the upper end of our guided range of 18%-20%. This performance reflects the resilience of our team's disciplined approach towards implementation of our strategic priorities. Operationally, we continue to leverage our comprehensive product range, which remains a key driver for our performance. Quarterly growth was led by growth in categories across office supplies, where we continue to see positive results on the back of enhanced capacities and positive market reception of products. Kits and combos, and hobby and craft categories saw robust demand growth driven by new attractive and utility-focused product launches. Holistic art materials, backed by addition in existing infrastructure with modernization of some of our processes, bolstering operational efficiency. Our baby hygiene business also saw a significant uptick fueled by winter demand for diapers and enhanced capacity as compared to last year.
Geographically, our revenue growth continues to be anchored by strong domestic demand, which has grown to represent more than 85% of overall sales. On the export front, despite headwinds in the U.S. market due to higher tariffs, we are pleased to report a double-digit growth of more than 15% over the 9-month period. This was driven by strong demand for DOMS-branded products across key categories like Nepal, Sri Lanka, Middle East, and few African countries where we are present. Additionally, our distribution agreement with F.I.L.A has yielded positive results with initiation of exports of DOMS-branded stationery products to countries like Chile, Mexico, Canada, Europe, Turkey, South Africa, and Australia. These initiatives and results clearly showcase our ability to navigate challenges and capitalize on opportunities in diverse markets. We are committed to expanding our product suite to meet the evolving needs of our growing consumer base.
The quarter saw new product launches like acrylic markers and SKU additions in sketch pens, mechanical pencils, pens, kits, and attractive kits across various categories. Further, I am pleased to share that we have recently commenced manufacturing and supply of vibrant metal pencil boxes designed specifically for kids. Complemented by a newly designed range of school bags and paper stationery, we are well positioned to capitalize on the upcoming back-to-school season. We have recently approved the formation of a 50/50 JV with Seven SpA, a F.I.L.A. group company. The primary objective of the JV would be to manufacture and supply backpacks, bags, and pencil cases targeting the premium segment. The partnership combines F.I.L.A.'s global reach, Seven's product designing and know-how, and DOMS' manufacturing and execution capabilities.
The formation of this JV is expected to be completed by the end of Q1 FY 2027, and we believe that the JV will likely add new growth initiatives for the company in the future. On the marketing front, we are strengthening our connection with audiences through innovative online and offline initiatives. Our social media community has grown significantly with over 3.8 million YouTube subscribers and 170,000+ Instagram followers, making DOMS a top-admired brand in stationery and art materials. Our success wouldn't have been possible without the continuous efforts of our people, who have been one of our strongest pillars for the growth. As a recognition of their ongoing contribution, we recently granted additional 137,690 ESOPs to the members of the DOMS family.
Coming to our expansion initiatives, during the quarter, we were able to enhance capacities across our core categories like scholastic stationery, scholastic art, and office supplies within our existing infrastructure, catering to the continued demand. Additionally, our 44-ac project remains a key focus area with ongoing CapEx investments, which will enable us to meet growing product demand. We are progressing steadily on the project, albeit with a slight construction delay on account of prolonged and unseasonal monsoon during the last fiscal. We expect to start the commercial production from the first building during Q2 FY 2027. This capacity expansion, along with other ongoing brownfield initiatives, has been strategically planned, hence the delay should not materially impact our plans, and other ongoing brownfield expansion initiatives should be able to support our growth strategy till that time.
Now coming to the details of our financial performance, consolidated operating revenues for Q3 FY 2026 stood at INR 592.2 crore, a growth of 18.2% compared to the same quarter last financial year. This increase in sales was predominantly on account of healthy performance in domestic markets, recording a 19.4% growth in gross product sales year-on-year during the quarter. During the quarter under consideration, input costs for most goods had remained constant or were lower, especially for key raw materials like polymers, waxes, etc., providing a positive impact to our margins. However, with prices now trending upwards, we expect a neutral impact on our full-year results. The consolidated EBITDA for Q3 FY 2026 grew by 17.7%, surpassing the INR 100-crore mark, and stood at INR 103.4 crore as compared to INR 87.9 crore in Q3 FY 2025.
The EBITDA margin for the quarter stood at 17.5% at the upper end of our guided range of 16.5%-17.5%. The profit after tax for the quarter stood at INR 61.4 crore, with a growth of 13.1% over the same period in the previous financial year, and the PAT margin for the quarter stood at 10.4%. During the quarter, PAT moderated slightly, primarily on account of reduction in other income due to utilization of IPO proceeds towards CapEx, which during the earlier period were passed in fixed deposits. However, the overall profitability remained within our guided range as our core business continued to demonstrate volume growth backed by stable margins, underscoring the robustness of our portfolio and the effectiveness of our disciplined execution framework. On the CapEx front, we continue to focus on our expansion initiatives.
For the nine-month period, we have done a consolidated CapEx of approximately INR 230 crores, including capital advances. With this, we believe our CapEx spend for the fiscal would now cross INR 250 crores. Looking ahead, we continue to remain optimistic about our growth plan, supported by our expected increase in demand in the domestic markets, especially with the onset of the upcoming back-to-school season, thereby positioning us well for sustained growth and achieving our laid-out fiscal targets. With this, I would now request to open the floor for questions and answers. 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 Jinesh Joshi from Prabhudas Lilladher Capital. Please go ahead.
Thanks for the opportunity. Sir, my first question is on Seven. I mean, what was the rationale for forming a separate JV with them to focus on, say, backpacks and bags when we already have an existing JV with SKIDO, which is into a similar line of business?
Hi, Jinesh. Seven SpA, with whom we've done this JV, was actually founded in 1973 by Seven brothers in Italy and is one of Europe's leading manufacturers of ergonomic backpacks, bags, trolleys, and accessories. Seven generated revenues of close to EUR 90 million in 2024 and holds a dominant position in Italy and across Europe in the back-to-school market and has a retail presence of over 6,000+ retail points. It also has more than 60 international patents for this category of products. Recently, F.I.L.A completed the acquisition of 51% stake in Seven. The proposed JV that we are doing with Seven, it merges Seven's premium design and R&D expertise with DOMS' strength of managing manufacturing operations efficiently, and it could lead to building a state-of-the-art Indian production for F.I.L.A Group's global backpacks and bag requirements.
And at the same time, it will allow DOMS to offer this premium range in the domestic market. For the success of this entire JV, the active participation of the promoters of Seven will result in effective transfer of know-how and expertise to the JV company. At the same time, SKIDO will objectively remain focused on the business relating to DOMS-branded bags, primarily catering to the Indian mass market demand for a range of backpacks and school bags, and also service the requirement of bags for DOMS kits and combo bags. This positions SKIDO to scale efficiently in the mass market segment, capitalizing on DOMS' brand and distribution network.
So with clear objectives defined for both the companies where SKIDO focuses on manufacturing, distribution, and sales of domestic mass market products, and the new JV focused on manufacturing for F.I.L.A's global demand and high-end premium range, we anticipate that there wouldn't be any conflict between both these ventures of DOMS, and both can be successful in the same segment.
Understood. Sir, if I heard you right, you mentioned that the sales of Seven was roughly about EUR 90 million in 2024. So is it safe to assume that that kind of potential can accrue within the JV? That is question one. And secondly, when is the production expected to begin over here, and what will be the typical price point of the backpacks, if you can just give some color on that?
So, Jinesh, we are targeting to complete the formation of the JV by the end of Q1 FY 2027. Initially, the plan is to start manufacturing operations to cater to the demand of Seven's products in the international market. Definitely, the opportunity is large, but we still don't have any number in mind in terms of the size of this operation. But over a period of time, we believe a sizable portion of the Seven's backpack requirement can be manufactured and exported from India. In terms of pricing of these products, if I look at the current portfolio of Seven, the prices of these bags in Italy start from around EUR 60-EUR 70 per bag. So now, what product gets finalized and launched in India, we are still a little time away from this.
But like I said, the first focus would be to start the manufacturing operations and use this production facility to meet Seven's global requirements.
Sure. Sir, two small bookkeeping questions from my side. One is that if you can just share what will be our CapEx number for 2027 and 2028, given the fact that our 44-ac expansion is towards the fag end of completion. That is one. And secondly, just one small observation. Now, if I look at our purchase of stock in trade on a nine-month basis, that is at about INR 63 crore, roughly about 3.7% of our top line. And if I look at the base period, this figure was roughly about 2% of the top line. Now, given the fact that we are largely backward integrated, can you please explain what has led to a surge in this number? I mean, have we started resorting to some kind of outsourcing within any of the products? So if you can just clarify on that bit as well.
So, Jinesh, to answer your first question, so this year, like we said on the call, we'll end up investing close to INR 250 crores in capital expenditure. We believe a similar sort of investment will be done in the next financial year with our CapEx investment target between INR 225 crores-INR 250 crores. Currently, I would say the first few buildings of the 44 ac are getting ready. But like we mentioned earlier also multiple times, this is like an ongoing project with multiple buildings being constructed in this project. And every quarter, starting from Q1 FY 2027, we'll get new buildings, possession of new buildings, and then about 90 days to commercialize operations. So this will go on for the next year and a half sort of a thing. To answer your second question on stock in trade, are you referring to the consolidated financials or the standalone financials?
Consoled figure.
So in console, there are two major activities in which you would see a little bit of increase in stock in trade is with respect to paper stationery. Earlier, Pioneer was our only subsidiary focused on paper stationery, but to meet the growing demand and to manage these operations better way, we acquired STPL in East and have started also getting paper stationery products manufactured from a partner, an OEM partner in South India. So that is one reason why this stock in trade in paper stationery has increased. And also, at Uniclan, which is a baby hygiene business, basically, their company is predominantly into pant-style diapers. In this quarter, we also introduced the flat diapers, a very small portion, but they were basically manufactured from a third-party OEM supplier and sold in the market under the Uniclan's Wowper brand.
Uniclan does not have the production infrastructure to make these flat-style diapers. Just in order to complete the product range right now, we've initiated some trading activity. Once this segment also grows, we'll evaluate, looking at more investment for these sort of diapers as well.
Got that. Got that. Thank you so much, sir, and all the best.
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Hi, good evening. Congrats on the sort of numbers. Just a couple of questions for my own person. Paper stationery, we have seen a degrowth. And I recall Rahul was telling me when you're largely focusing a lot towards it, what's missing here and why the degrowth is what I wanted to understand.
Sneha, if you see in paper stationery, year-on-year, for the third quarter, you'll see a slight degrowth. One of the reasons for this is earlier, a lot of our paper stationery business was being rooted to Pioneer Stationery, and there was some amount of trading activities for the papers that we used to buy. For example, STPL, which was last year not a subsidiary in this time, when we used to get books manufactured for them, we used to buy the paper and sell it to STPL and buy the books from them. So there was some amount of trading activity, which has now decreased. But if you look at the nine-month number, YTD number, you'll see in the paper stationery segment, we've grown at about 8.7%-8.9%.
And now, with the back-to-school season coming in and now having more capacity with STPL plus also our partner in South India, we believe this segment will perform much better.
Thank you, Rahul. Secondly, on the new capacity, which is likely to come up, and you've been saying that it will be coming up in a phased manner, if at all you can give some recap as to first year, which are the products where the focus will be on so as to analyze the growth in individual segments, and followed by next year, expansions will be in which other phase?
So, Sneha, first, we'll start with enhancing our capacity for wooden pencil. If you remember, we were planning to initiate capacity expansion for wooden pencil in our existing infrastructure. But looking at the strong demand that we had in the ballpoint segment, we then decided to expand our ballpoint manufacturing capacity in the existing infrastructure. So wooden pencil capacity expansion is something which we'll first do in this 44-ac project, followed by enhancement in production capacity for our writing instruments, then pencil and pencil accessories, which is basically eraser, sharpener, followed by scholastic art materials. But again, sir, again, Sneha, basically, one of the strategies that we've always followed is to be a little flexible when it comes to introduction of capacities to meet the demands of the market and, as much as possible, be a little more flexible when it comes to initiating these capacity additions.
So if there is any change in the market demand scenario, then we will probably change. But otherwise, the current plan is to first do pencil capacity additions, followed by writing instruments, and then scholastic art.
Understood. Now, I also wanted to understand in our hygiene segment, now what would be the breakup between the diapers? I know we've recently launched the wet wipes. But still, any breakup here would be helpful.
More than 90% of the sales is still diapers. Wipes is something which is still building up. We started with a single SKU in the wipe segment with a pack having 72 wipes. We've recently introduced a smaller pack with 30 wipes. Sales on this segment is building up. Right now, more than 90% of the sales comes from the diaper business.
Understood. Eventually, what would be the actual mix here? Can it become more like 60/40, or it has to be any share which is an ideal share in this particular business?
Not targeting anything. Diaper remains a core focus area. Wipes is a complementary product. So the key focus would be diapers. Currently, the way we have the capacity, I assume that this percentage of 90%/10% or 85%/15% would continue for some time.
Understood. Thanks, Rahul, and all the best to you.
Thank you.
Thank you. The next question is from the line of Aradhana Jain from B&K Securities. Please go ahead.
Hi. Thank you for the opportunity. Congratulations for the continued good set of numbers. A couple of questions. First, I wanted to know a little more on the JV. So basically, the INR 15-odd crores that we are initially investing, what is the plan? What's the sort of revenue potential that we are expecting from this particular JV? And like you said that SKIDO will be we are positioning SKIDO as a mass brand, while this will be a premium brand. So initially, is the plan that we'll just be exporting, or will we also be targeting the domestic audience in India? What is the thought process? And the initial investment is INR 15-odd crores, but going forward, do we expect more investment in this particular JV, and where exactly will the manufacturing be done? That's my first question.
Hi, Aradhana . Basically, the approval that we've taken right now and disclosed to the stock exchange is basically a total investment up to INR 15 crore by both partners in proportion to their shareholding in the JV company. This JV company, like I mentioned initially, will first focus on the export opportunity which is available, whereby the JV company will be an OEM manufacturer for the backpacks and supply it to Seven and other F.I.L.A. Group companies across the world. In terms of product category, these bags are ultra-premium backpacks. The audience in India for such backpacks is very, very limited. But right now, also considering SKIDO also operates the entire business through the DOMS Distribution Network, when we decide to launch these ultra-premium backpacks in India market, it will be done through the same distribution network but targeting a very small, very niche set of end consumers.
In terms of projections, we don't have. We've not yet prepared anything because this investment will happen in a step-by-step manner. But with our experience of running SKIDO for almost a year and a half now, we believe that even in this business, achieving a 3x-4x sort of a gross fixed asset turnover is something which is achievable. But it will happen across the next year or so once the buildup starts.
Understood. The manufacturing will happen in [Umargam] for this, or?
In [Umargam]. It will happen in [Umargam].
Understood. My second question is on office supplies. Office supplies have done really well this quarter as well. What is leading to this kind of traction? Have we added new pens which is leading to this growth, or the growth is primarily coming from the existing pens that's gaining traction? And in the pen segment, do we have a hero product which is standing out amidst all the other products? And have we expanded beyond the INR 10 price point at this point in time?
So, Aradhana, basically, for us, all our products are hero products. We invest so much in making a product, so all the products are very close to our heart. And the reception that we get from the market is also something similar. So basically, the growth that you see in the Office Supplies segment is definitely driven by writing instruments, the pens, where we'll be continuously increasing our capacity. And earlier, when we started our new molding unit for pens, you typically start with a few set of machines getting operational. And over a period of time, all machines become operational. So in this quarter, you've basically seen the entire pen segment capacity addition buildup that happened in the last previous two quarters coming in production. Therefore, you see good results from this segment.
In terms of focus, we still continue to focus primarily on the INR 5 segment and with expanding our portfolio in the INR 10 segment also. So mixed wise, we are still similar to what we were earlier.
It's like 70% coming from?
We've not moved beyond the INR 10 segment yet.
Okay. And in terms of, we also had plans of bringing in tips in-house. So any progress there, or are we still obtaining the tips from outside?
No, we still continue to operate tips from outside. As we said that we want to get into manufacturing of tips, this is more from a perspective of having some amount of internal control over the type of tips and to understand how it will be more like an R&D plus in-house consumption requirement that we have. We are in the process of getting there. So once the new facilities start, then we'll also get into tip manufacturing.
In terms of so guidance for FY 2020.
Sorry to interrupt you, Aradhana. Sorry to interrupt you. I request you to rejoin the queue for a follow-up question, please.
Sure. Okay. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. The next question is from the line of Percy from IIFL Capital. Please go ahead.
Hi, Rahul. Good evening. Bags seem to be a focus area for you. Just wanted to understand in SKIDO, till now, what has been our investment, and what is the revenue turnover of this business, whatever you want to say, either on a FY 2025, 2026 basis, or a quarterly number, or an ARR, just for us to get a sense as to how the business is ramping up.
Hi, Percy bhai. Good evening. So, Percy bhai. Backpacks, or I think the entire back-to-school segment is a segment which we were keen at exploring since a long time. With SKIDO, we found partners who helped us in getting into this segment, especially in the mass market segment, very well. The bags were launched in the last back-to-school season, towards the end of the last back-to-school season. And now, this is going to be actually the first complete back-to-school season where we'll be launching this product. Till now, we've invested about INR 1.02 crores in SKIDO. And for the nine-month-ended 31st of December, we've generated a sale of about INR 9.5 crores in this business. This is both the products that we sell in the market under the DOMS brand and also the bags which SKIDO manufactures and supplies to DOMS for its kits and combo packs.
You said, sorry, nine months, FY 2026 is INR 9 crore.
Yeah. The total investment in SKIDO will be roughly about INR 2+ crores .
Understood. Understood. Coming to.
For DOMS, that puts in about INR 1.02 crore proportionate to our shareholding.
So coming to this Scholastic Art business, I think it has grown about 12% in this quarter. So just wanted to understand, see, we understand your growth drivers, which is the pens segment and all these new initiatives, bags, etc. But your core bread and butter, which is the stationery business, the Scholastic Art and Scholastic Stationery business, I mean, where are we now in this segment in terms of distribution? Where are we in terms of market share? What is the market growth here? And what do you think we can grow this business over the next three to four years, which would include our own market share gain? So just, I mean, not asking for guidance, but just asking for a way to sort of evaluate and model this business out.
Do you still think that this is a business which can grow at sort of close to 15%-20%, or do you think that, no, there will have to be these other new growth businesses like pens, bags, etc., which will need to grow at maybe 50%-100% in order for the company to do that high teens kind of a number?
So, Percy, basically, scholastic stationery, scholastic art, and kits and combo is something which we look together because there are a lot of complementary products in these categories. So overall, when we see all these three categories put together, we've grown by about 11.5%. A few reasons for this growth, especially if you see scholastic stationery, is despite the impact of US tariffs, one of the key products that we used to export to the F.I.L.A. Group company in the US is wooden pencils, the black lead wood pencils, where after the impact of 50% tariff, this sales has come down considerably. Despite that, in this segment, year-on-year, we've grown by about 2%. This has been because, one, we've launched mechanical pencils, which were launched in Q2 FY 2026, and they've got good reception from the market. These are categories scholastic segment.
Plus, a little bit of spare capacity which we had from the decline in sales to U.S. for the wooden pencils was used to increase the capacity for wooden colored-lead pencils, which gets categorized in Scholastic Art. So that is one reason where you see the sales in the scholastic art segment increasing significantly year-on-year. Plus, like we mentioned, that we are slowly starting to increase our capacities for the wooden pencils. In the 45 ac, the first plant that we are going to get ready will be focused on wooden pencils. Out of that, some capacity buildup has already started because we had some space in our color pencil division. So we've increased that capacity there. So overall, color pencil as a subsegment has done really well.
In terms of overall capacity increase, our target to increase the capacity of our wooden pencil is from about 5.8 million that we have—sorry, 5.53 million that we have currently—to about 8 million going in the next couple of years. This will be a gradual increase. So in the coming year and actually, more in the year after, in FY 2028, you'll see significant growth coming from the sales of scholastic stationery and scholastic art materials, where wooden pencils will become a key growth driver. We believe that there is still significant potential in the market, both in domestic and on export front. There are already now talks of the U.S. tariffs coming back to normal. So once this comes back to the normal range, again, the lost sales to U.S. will reinitiate.
Plus, with more capacities in place, we'll be able to get a better output for both the domestic and export markets. So we are confident on the growth prospects on these two segments as well. In terms of market share, honestly, we don't track or follow any market reports, but would be fair to assume that we'll be, especially in the pencil segment, upwards of about 35%. And with the new capacities coming in, we'll be close to about 45% sort of a market share.
This 11.5% is with exports. Can you tell me what the number would be for only the India business?
For the growth of.
For the three segments, you said?
Art and kits together.
Yeah, yeah, yeah. The scholastic art, scholastic stationery, kits, and combos, which you said together is 11.5%, that includes exports. What would it be for the India business?
I would not have this answer right now, Percy. Probably can come back to you all with this reply. We'll have our IR team get in touch to answer it. I don't have the numbers offhand right now.
No problem. And this 11.5% which you have done going ahead, let's say, over a three-year CAGR, what do you think should be a target for a three-year period?
So, Percy, this will all depend upon when the capacity is going to come up and how it is going to be built up. But this should follow. Once, see, there will be a time when there is a major capacity addition happening. You'll see this number to increase significantly in that year and then moderate down. But.
But that's why I'm taking notes. No, I don't want to hear about the understanding.
Yeah, yeah. So this segment also should follow the company's overall growth range in the next three to five years.
Okay, okay, Rahul. Thanks a lot. That's all from me. All the best.
Thank you.
Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead.
Yeah. Thanks, Rahul bhai. So first, how should we look at the new capacities and their contribution? Would it add 5%-7% every quarter? Will it be lumpy? And how does the capacity come in over the next 6-8 quarters? That's the first question. Second one, I'll come to Lily later, but if you can ask the first one.
So, Kunal bhai, basically, historically, the way we've seen it is once we get the possession of the building, to start the plant, it takes us almost about 90 days sort of a period. And once we start the plant, it takes us about six or so months to reach a decent level of capacity utilization because in the initial phases, there are some buildups happening, some connections and assemblies and synergies that get developed. You need to sometimes change the positioning of certain machines and all. So it takes us about 6-7 months to reach a decent level of production. So this is how we see typical buildup happening. So the idea is every three months, having some new capacities, starting first with pencils, then with office supplies, just purely writing instruments which include pens, markers, highlighters.
Then would be pencil accessories, which is eraser, sharpener, because that will complement the growth in capacity for pencil because in a pack of pencils, you need to give one sharpener and eraser three. And then eventually followed with some amount of additional capacity for Scholastic Art Materials.
Thanks for that. But I wanted to understand whether it will be uniform. It will be uniform, or it will be lumpy? I mean, say, will there be one large factory, or it will be similar-sized factories, similar contribution from each of the factories?
So basically, Kunal bhai, in the 45-ac project, most of the buildings are similar in size, which is about 150,000 sq ft each building. So this is since you've seen plants, just to give you a reference, this is almost double the size of our current eraser plant which you would have seen. So they are similar. So the growth will not be very lumpy. Yes, there would be some quarters where you will probably see a lump compared to the base quarter because probably in the base quarter, you might not have had that amount of capacity addition. But sequentially, it should be pretty much in line.
Understood. How many factories will come in total over the next whatever, 2 years, 3 years, 4 years?
Right now, we have plans to construct about a total of nine buildings.
Nine buildings. Okay. Understood. Okay, okay, okay. Second one is regarding the.
There is construction going on for sheds. These are going to be basically storage units. Then there would be utility buildings. So these are all in addition. But right now, we are planning to have nine more buildings constructed for production purposes.
These nine buildings will come over about nine quarters? eight, nine quarters? How does it come?
Yes.
Understood. Okay, okay, okay. Second and last one is regarding the ultra-premium bags you will be manufacturing. Where are these bags currently getting manufactured, and what is the cost saving you are able to achieve? And will the margins be comparable to what you make currently?
So this production with F.I.L.A DOMS is right now, they have small facility in Italy and also source considerably from China. Definitely, with the Seven, the partners, like F.I.L.A's partners at Seven also being involved in this JV and working closely with DOMS, they will also have their skin in the game. So they would also want to shift as much production as possible to India over a period of time. So this can become a sizable business for DOMS as well.
What's the rationale? I mean, will the cost be which you will be able to deliver be much lower compared to what the China cost will be, or the quality? Or what's the rationale of shifting the production?
So this Seven will have a little more control because this will be now their own joint venture. Like we have 50%, they will also have 50%. So they will have more control. Plus, with F.I.L.A and DOMS' partnership, we've been able to demonstrate in certain key categories like pencils, Scholastic Art Materials, that from a production perspective, we can be as competitive but much more trustworthy and better quality products than China. So we would want to replicate the same success for the Seven DOMS JV as well.
Okay. And lastly, what's the current turnover? And do you think almost everything which is getting manufactured can come to you, or you'll have to prove yourself? I mean, how does that work?
We definitely have to prove ourselves. It's not that everything will come to us. Today, after almost more than a decade and a half sort of a partnership with F.I.L.A., we've still not been able to get all that production because our focus is always equally important to grow the DOMS brand as well. So I wouldn't say that 100% will come to India. But once we start this process, I think we can have a significant portion coming to India in the next few years.
Okay, okay, okay. That's it from me. Thank you, sir.
Thank you. The next question is from the line of [Sunny], an individual investor. Please go ahead.
Hello. Am I audible? Hello? Am I audible?
Yes, we can hear you.
Yeah. Hi, hi. So I just wanted a qualitative view about, number one, where do you see your new acquisitions in the foreseeable future? What are your learnings from the new acquisitions, like in the diaper segment or in skid or in the other companies? And number two, maybe expect a bump-up in your earnings given that the huge CapEx you have been doing in the last two, three years. So in which financial year do you see a bump-up in your earnings from the huge CapEx? So these are the only two questions, sir.
Thanks, [Sunny]. Actually, right now, all our acquisitions are really decent business. Like I just mentioned, which we started, which we invested about nearly two years back, has done a YTD sale of almost close to INR 10 crores on a total investment by both the partners who put together of about INR 2 crores. Wowper business is doing well. When we invested in this company last year, they closed last full financial year at INR 160-odd crores. This year, we are targeting to close at close to INR 200 crores. Pioneer, there has been a shift in the business model where earlier, Pioneer used to do direct sales. Now, it gets rooted through DOMS. Despite that, the company has grown in sales. Micro Wood, which is basically supplying material to DOMS, packing material to DOMS, is also doing well. So overall, all companies are doing well.
STPL Super Trades is something which we invested very recently. This is now the first back-to-school season where we'll participate through them also. Given its strategic location, the pedigree of the management, and plus some amount of backward integration that we are in the process doing there, we believe this would also be a successful acquisition for us.
Right, right. And regarding the when do you expect the sales uptick?
So, Sunny, we'll basically the way we planned, not right now, but historically, has been always to achieve a very steady growth. CapEx and investment in capital expenditure is like an ongoing activity. During the last few years, also after listing, you would have seen that the sales of DOMS has been very measured and grown without any bumpiness. It's something where we've grown sustainably. So we'll want to follow the same approach. So right now also, while there has been some amount of delay in our new project, but we believe there have been other significant investments that have been happened in our current infrastructure plus sudden other brownfield investment that we've done, which will support a similar sort of a growth pattern in the coming few financial years as well.
Right, right, right. That's it. That's it. Congratulations from my side for great results or consistent results over these years, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Ananya Nichani from Thinqwise Wealth Managers LLP. Please go ahead.
Hi. Thanks for the opportunity. I wanted to ask about Uniclan. The EBITDA margins in this quarter are at 12%, whereas the guided range was around 7%-8%. So I wanted to understand what caused the spike in margins and whether it's sustainable. Thank you.
Hi, Ananya. So right now, basically, for Uniclan or for the entire diaper business, you could say that the third quarter is one of the strongest quarters in terms of performance, with more than about 30% of sales coming in single quarters because of the winter season. And this is slightly a seasonal business where with the onset of monsoon, the business starts. During peak winter, it is the highest sales, and then it tapers down after [Holi] sort of a thing. And Q1 is almost the weakest. So in this quarter, what typically happens is your fixed cost utilization is highest. That's the reason why you'll see the EBITDA margins to be the highest in this quarter.
But when you consolidate the full year numbers where Q1 is weak, followed by Q4 and then Q2 and Q3, at the same level, we think this business will do about 8%-9% annual margin.
Thank you.
Thank you.
Thank you.
The next question is from the line of Mosam Shah from Wealth Guardian . Please go ahead.
Hello. Thank you for the opportunity, and congratulations on a good set of numbers. My first question is regarding the Jammu and Kashmir land that we have acquired. So basically, around that, what cost have we acquired?
So Mosam, hi. We paid about INR 16 crore for acquisition of land, building, and certain electrical fittings, which will be also used with the company. The land is spread across about 2.5+ ac with a built-up area of close to 50,000 sq ft. And this is strategically located very near to our current operations in Jammu, so management would be more easier. Here, we plan to enhance some amount of our capacities for wooden slat processing, and as well as there are certain attractive products in the fine art category also, which requires some amount of processed wood, which we get from this new investment in Jammu.
Okay. Okay. Thank you. And also, so we are guiding for 18%-20% revenue growth, whereas in the first nine months, we have already done 23%. So is this something that we are guiding limited revenue growth, or are we seeing a degrowth in quarter four, being back-to-school season and everything?
Mosam, if you would have seen the numbers in the third quarter, if you compare year-on-year, our growth has been about 18.5%, 18.7%, to be precise. This is because in the base period now, starting from third quarter, the base period will already have the impact of the Uniclan acquisition. So when we forecasted for the full year growth of close to 18%-20%, we knew that first two quarters will be higher growth because there was no Uniclan consolidation impact in the base quarters, while in the next two quarters, we will have an impact of the Uniclan. So the growth percentage on a much larger sort of a base will be a little lower. But having said that, it's not that we are looking at any sort of a degrowth.
We are confident that we'll close the year at the upper end of the guided range and at the same time continue to be a little conservative. That's normally the way how we've always been. But we are confident that we'll achieve or reach at the upper end of the guided range.
Okay. Okay. Thank you. And also, this quarter, we have achieved a revenue in our revenue mix. There's a lot of higher proportion given to the Eastern market. So is it because of the new acquisition, STPL?
In the Eastern market?
Yeah.
No, no. Typically, you're comparing sequential growth or year-on-year?
Year-over-year. Year-over-year. Year-over-year.
Typically, we have.
In our regional mix, we have.
I don't know. I have to check. But Mosam, one of the reasons is sometimes what happens is it really depends upon the festive season also. So if the Durga Puja season in the fiscal year 2025 was in the third quarter, then the sales in East India becomes a little less during that period. And this year, I remember that Durga Puja was actually in the second quarter. So probably that can be one reason. But otherwise, there has been no impact of the STPL acquisition on it. It is just that the business fundamentals are playing out. STPL, like I said, now is the season where we'll see good impact of STPL acquisition coming in because one earlier, it's a new acquisition. Then the GST rate change had impacted the sales of paper stationery overall.
After that, during that time and currently, we invested something in backward integration in terms of a printing line being set up, which is already close to completion. This quarter, we see significant revenue, decent revenue being consolidated from STPL to DOMS.
Okay. Okay. Thank you so much and all the very best.
Thank you. The next question is from the line of Aniruddha from ICICI Securities. Please go ahead.
Yeah. So Rahul bhai, two questions. One, commodity price inflation is pretty high. So how are you managing it in terms of price hike, trade spends, management, or change in revenue mix, product mix? Because rather than inflation, the volatility in commodity prices is also extremely high. So that is question number one. And question number two, if you can share more details on the ESOP plan in terms of how many employees have got that and vesting period target, whether it is in view of cash salaries or bonuses, or it is in addition to the cash salaries, bonuses, etc. So any further details that you can share. Yeah. Thanks.
Okay. So Aniruddha-bhai, thank you for your question. You rightly point that in the current quarter, especially from the time there have been these discussions about Greenland and Iran, there has been a significant increase in prices. The volatility has also increased. But as a company, right now, we are just waiting and watching whether these are sustainable or if these are something which are like a temporary phenomenon. Once a month and a half sort of a thing plays down, we will decide that if these remain sustainable, then we will have to change our pricing structure either in terms of the channel margins or the MRP of the product, depending on how the cost sheets pan out and how much it will increase. So definitely, this will have a little bit of impact on our margins in the current quarter. But to what extent, we still don't know.
Plus, we have a very large purchase basket. We've not seen still an increase across the purchase basket, but these are in some of the key raw materials, while for some other key raw materials, the prices continue to remain constant. So that's something which we will wait and then decide on how and when to pass on any increases, if any. Secondly, in terms of ESOP, so Aniruddha bhai, these ESOP grants that we've done, we've done it from our existing approved ESOP scheme, which was the ESOP 2023 scheme. From this scheme in October 2024, we had done certain grants. I think about 117,000-odd grants had happened to about 900+ employees. This year, from the same pool, we've granted about 137,000 of ESOPs to 1,000+ employees. So basically, the vesting period and timeframe remains the same. This is in addition to our current CTCs.
Okay. Sure, sure. This is very helpful. Many thanks. Congrats for a great set of numbers. Yeah. Thanks.
Thank you so much.
Thank you. We'll take the last question from the line of Anik Mitra from Finnomics Solution Private Limited . Please go ahead.
Am I audible, sir?
Hi. Yes, you are.
Yeah. Thanks for taking my question. Sir, your new means brownfield capacity expansions and also greenfields are coming in phased manner. So what sort of revenue addition we can see over the period of time, if you can guide us from another four-to-six quarters point of view?
So honestly, right now, what we are seeing right now for the coming financial year, we will probably continue our growth momentum of close to 18%-20% revenue growth. The same sort of a growth that we'll be closing with this current financial year, we'll try to achieve the same growth in the coming financial year as well. And after that, we should also remember that the base on which this growth is being achieved is increasing. So after that, we've still not made a plan of what it would, but that will depend on how the capacity build-up stands up. At least for next year, we can say that we'll continue the current growth momentum and target to achieve a sales growth of 18%-20%.
Okay. So sir, whatever 18%-20% you are projecting for the next year, will it come from these additional capacities, or is it the normal with the current capacities?
Predominantly from the full utilization of the current capacity because the capacity addition that has happened during the course of this year for the nine months plus in the next three months, you'll get full benefit of that in the coming financial year and plus some new capacities being added in the coming financial year. But it will be more of a volume-driven growth.
Okay. Okay. And sir, with the backward integration, whatever you are doing for pencil capacities, so what sort of margin improvement we may see at full capacity utilization or at optimum level of utilization?
So Anik, basically, we are already one of the most backward-integrated companies when it comes to manufacturing of wooden pencils. So this is the new capacity addition that we might be doing for backward integration will be to support the increase in capacity for the main product. Now the capacity of pencils is going to increase. So there won't be any significant impact of this on the margins.
We can consider margin will be as it is, means it will be maintained. To maintain the margin, this capacity utilization will means this additional capacity will help.
Absolutely.
I got it. I got it. That was from my side. Thank you so much. Congrats for a good set of numbers, sir.
Thank you so much.
Thank you. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for the closing comments.
Thank you, everyone, for joining us. We appreciate your continued support and confidence in our journey. Should you have any further questions, please reach out to our Investor Relations team. Thank you and have a great day ahead.
On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.