Ladies and gentlemen, good day and welcome to the Flair Writing Industries Limited conference call. 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, then zero, on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Devansh Dedhia from Orient Capital. Thank you, and over to you, sir.
Good afternoon, everyone. Welcome to Flair Writing Industries Limited Q2 FY25 earnings conference call. Today on the call, we have Mr. Vimalchand Rathod, Managing Director, Mr. Mohit Rathod, Whole Time Director, Mr. Sumit Rathod, Whole Time Director, and Mr. Alpesh Porwal, the Chief Financial Officer. Short disclaimer before we start this call: this call will contain some forward-looking statements which may be believed upon our belief, opinion, and expectation of the company as of today. These statements are not a guarantee of future performance and will involve unforeseen risks and uncertainties. Thank you. With that, I would now like to hand over the conference to Mr. Vimalchand Rathod, Managing Director. Thank you, and over to you, sir.
Okay. Good afternoon, everyone. I want to express my gratitude to all the participants who have joined the call. I hope everyone has the opportunity to go through our investor presentation and press release that we have uploaded on the exchange. Our pen segment achieved sequential growth on account of improving domestic demand scenario, as guided in the previous call while registering a steady performance year on year. Creative Range exhibited resilience during the quarter, posting stable results despite facing supply constraints from key suppliers. Steel Bottles and houseware segment continued its rapid scale up, providing us with meaningful delta in the quarter. We remain expressly confident over the upcoming second half of the financial year to achieve our guided growth objectives. I now hand over the call to Mr. Alpesh Porwal, our CFO, to discuss the financial performance.
Good afternoon, everybody. Moving to the consolidated performance of the company for Q2 FY25. Revenue from operations for Q2 FY25 was at INR 270 crores, an increase of 5% year on year. Gross profit for the quarter was INR 143 crores, which increased by 13% on year-on-year basis. Gross profit margin came in at 52.8%. EBITDA for the quarter was INR 51 crores, declining by 6% on year-on-year basis. EBITDA margin was at 18.7%. Profit after tax for the quarter was at INR 33 crores, stable year-on-year basis. Profit after tax margin for quarter was at 12.1%. In Q2 FY25, our company has achieved healthy sequential growth. Revenue from operations for Q2 FY25 saw an increase of 9.3% sequentially. Gross profit improved by 16.1% on a sequential basis. Gross margins increased by 310 basis points.
Expansion in gross profits and gross profit margin was on account of easing input costs, prudent inventory management, and higher contribution from premium products. EBITDA increased by 20.4% on a sequential basis. EBITDA margin expanded by 170 basis points. We are delighted to share that we, as a company, are firmly on path to achieve our guided margin range of 19%-20%. Sequential EBITDA margin expansion was in line with GP margin growth, further aided by moderate growth in employee expenses. Profit after tax increased by 25% on a sequential basis, with profit margin improving by 150 basis points. Lower interest outlay, given our net debt negative status and largely in line depreciation, boosted further sequential rise in bottom line. Moving to the half-yearly results, consolidated performance of the company for H1 FY25. Revenue from operations for H1 FY25 was at INR 517 crores, an increase of 2.7% year-on-year.
Gross profit for the half-year was INR 266 crores, which increased by 6% on year-on-year basis. Gross profit margin came in at 51.4%. EBITDA for the half-year was INR 93 crores, declining by 13% year-on-year. EBITDA margin was at 17.9%. Profit after tax for the half-year was at INR 59 crores, declining by 10% year-on-year. Profit after tax margin for quarter was at 11.4%. Our performance in Q2 FY25 is a testament that we are converging onto our higher historical performances, especially on the margin front. This uptake in performance is especially encouraging given it comes on the back of a challenging first quarter on the demand and overall macro front. Second half have always been stronger as compared to the first half for our company, and we are very excited to carry the present quarter's buoyancy in operations as we look to outdo ourselves going forward.
While there may be a temporary spike in certain expenses, let me assure you, some of these are necessary outlay as we scale up as an organization to ensure future growth. Our CapEx outlay as of H1 FY25 was INR 68 crores. Our CapEx plan remains unchanged. I would now like to hand over to Mr. Mohit Rathod, our Whole Time Director, for insights into each business segment.
Good afternoon, everyone. First, our pen segment. Our total revenue for the quarter was INR 270 crores, out of which pen contribution was INR 213 crores in Q2 FY25, thus contributing around 79% to our top line. As highlighted in our previous earnings call, the domestic demand momentum has continued post-elections, with our largest segment registering a growth of 8.6% sequentially. Domestic performance of the pens was very encouraging from a demand perspective as we grew in double digits. Hauser brand continued its market dominance, growing higher than 25% year-on-year. The brand's performance in a rather challenging environment highlights the superior position of Hauser XO, being the market leader in the industry. Pierre Cardin registered more than 20% growth, being in line with the company's strategy towards premiumization. For the quarter, we introduced 14 new models in the overall category.
From these, nine were launched in mid-premium to premium category to consolidate our leadership position in these segments. Our ASP for overall business increased from INR 5.5 in Q2 FY24 and INR 5.3 in Q1 FY25 to INR 5.7 in Q2 FY25, a testament to our focus on improving our basket of mid-premium and premium products. Coming to Creative Range, creative segment remained steady in Q2 FY25, with the revenue clocking in at INR 41 crore, stable year-on-year. The segment grew by 10% year-on-year in H1 FY25 to INR 78 crores. The creative segment had one of our key suppliers faced a major financial distress, due to which they had to close their manufacturing units. This, in turn, affected the supply to the company for about half the quarter.
In cognizance to this situation, the company had pre-ordered molds for these products, with in-house manufacturing scheduled to begin in the next quarter as a measure to de-risk dependence on external suppliers. Disney-collaborated products have been approved by the concerned parties and were launched in September. This will provide an additional avenue for growth in this segment. The products would be priced similar to our other kits, with a simple objective to capture mind space and shelf space amongst the kits and make Flair a more widely recognized brand. Talking about steel bottles, steel bottles registered an impressive 248% growth year-on-year to INR 12 crores. For the first half of this year, we clocked in a revenue of INR 20 crores, already surpassing full-year FY24 contribution from this segment. We enhanced our steel bottle offerings with the launch of three new variants in this quarter alone.
Going forward, we plan to launch three new designs every quarter to significantly expand our existing product offering in the domestic market. Contribution of our own brand sales to overall mix improved further to 90% in Q2 FY25 from 87% in Q2 FY24, with overall our own brand sales growing by 9% year-on-year to INR 242 crores. In domestic markets, our own brand registered 15% growth on a year-on-year basis. Over the years, we have been focusing on our own brand business to be our core growth driver. We have consistently delivered double-digit growth from this vertical wherein our company has operational control. I would now like to highlight some strategic steps and areas of focus for the future. In view of the current domestic OEM situation, we will focus on our own brand sales for the growth in domestic market.
While revenue from domestic OEM is expected to remain steady at the current quarterly level with limited downside. Our own brand provides us with good opportunities in view of their catering across price points and dominant market presence of Flair and Hauser, providing better control over margin and other prospects. Over the past quarters, export OEM division has stabilized, having grown steadily. This provides further wind to our sales. Although export sales have decreased in the current quarter on the demand and freight headwinds, we still are about the same with recovery foreseen in the second half. We are the largest exporter of writing instruments in the country and are always on the lookout for expanding our global footprint. In creative, the track record of the segment is one of the high growth, and we are very, very confident that this will carry on in the future.
There are three broad strategies that we would work on: increasing product portfolio and capitalize on viable white spaces. Two, increase in distribution reach of the segment through increased channel fill. Three, increase in in-house manufacturing capability, gradually reached to 75% in the coming year. In Steel Bottles, we are experiencing an increasing month-on-month sales growth trend in this division. There is a huge scope in domestic market in terms of import substitution, and we have two clear strategies to pursue: introducing high-quality and attractive bottles that stand out for the end consumers and enhance distribution network by new tie-ups within Modern Trade while exploring e-commerce and larger stores within our own distribution network. Premiumization strategy. Premiumization continues to remain at the core of our operations. We strive to retain a healthy mix of mass mid-premium and premium segments.
Successful execution of our premiumization strategy has helped us to consistently ease higher realization per piece on back of brand positioning, extensive portfolio catering to mid-premium and premium markets, as well as constant innovation in products that have satisfied consumer needs. Overall, we are optimistic for the future growth with pen segments now being on track, ably supported by two high-growing segments, creative and steel bottles. Going forward, you will see the fruits of executing these strategies as they start reflecting in our business performance. I will now request the moderator to open the floor for question and answers.
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 phone. 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. Our first question comes from Sneha Taldeja. Sorry. The first question comes from Shraddha Kapadia from Share India. Please go ahead.
Am I audible?
Yes.
Thank you so much for the opportunity and congratulations on the set of numbers this time. So I just wanted to understand if you could help us.
Ms. Kapadia, your voice is sounding muffled and it's echoing, so if you're using the speakerphone, may we request to use the handset, please?
Hello. Is this better?
Yes, much better. Please go ahead.
Yeah, yeah. Sure. So if you could help me understand the challenges which you may be facing in your supply chain especially, and also how are you planning to address the same? Because last time we had mentioned about the Red Sea crisis and the freight issues. So are we still facing it, or is it resolved now?
So as far as export is concerned, of course, last quarter we had faced this issue. Currently, also, we are facing a similar issue, but going forward, we are very, very optimistic after we had a conference call with all our distributors, whoever is handling our brand. And we got very, very positive feedback from them. And if you look at the absolute value terms, we are in degrowth by INR 12 crores in export markets. And going forward, we're going to recover that amount in exports going forward. So we are on track as far as exports is concerned.
If we are confident, then we will be able to achieve the target what we have set for us.
Okay, so thank you so much for the reply. Also, I just wanted to understand that we have provided the guidance in the last quarter for the three years, so do we stick to it, and how do we plan to have much more growth in the second half considering the first half has been a bit impacted?
Yeah, so if you look at our historical performance, ideally, second half is always better than the first half, and going forward, looking, checking all the parameters of all the brands, be it pen segments, steel bottles, and creative, we are not changing any guidance towards the target. We are in line on achieving our target for the current year.
Okay, so thank you so much for the opportunity.
Thank you.
Thank you. The next question comes from Sneha Taldeja from Nuvama. Please go ahead.
Hi. Good evening, sir, and congrats. I mean, thank you for the opportunity. Just a couple of questions from my end. Firstly, on the creative side, you said that there was some supply constraint issue based on which I don't think you've seen any growth in Q2. Has there been thought, and are you on track for growth in creative on a YY basis from Q3 onwards?
Yeah. Hi. So when we talk about Q2, yes, there was a supply chain issue which has been spotted now with the alternative supplier. And as I already just like to reiterate that we have already placed the order for the molds. So we would be starting the same product with in-house manufacturing by the end of the quarter. So we would be spotting that issue. And when we talk about the overall growth of creative, if you look at H1, it has been 10% growth. And we are in line as we committed that in coming two quarters, we would be at 25% growth.
So that will be after Q3. Q3 will still have constraints. From Q4, you are on track for 20%-25% growth?
Q3 onwards, you will see the upper trend.
Understood. Secondly, while you just mentioned to the previous participant that you are on track of achieving your guidance, which is around 11%-12% CAGR sort of a journey, even if I have to put that number in your revenues, that means you will have to do Q3 and Q4 20%-20% plus growth.
Right.
How do you plan to achieve it? Which are the segments which you expect are going to drive it at first? Secondly, your EBITDA annual margin guidance stands at about 19.5% sort of a number. And the first two quarters have, of course, been subdued. So how are you planning to achieve even the margin number?
Right. So when we talk about the top line, the pen segment, of course, if you look at our traction of last three months, it has been very, very positive as far as domestic is concerned. And similarly, going forward, we expect the same in domestic front. As far as exports also, we have been getting very positive feedback from our distributors. And other than that, our OEM suppliers also have the kind of projections what they have given. It looks like in overall pen segment, we are on track. As far as creative is concerned, we have been always growing at 25% year-on-year. Of course, barring the last quarter, which was flat.
Going forward, also, we would be in the similar trajectory of 25% plus in creative because there are two, three new production lines which are coming, as I already mentioned, in watercolor pens, in wooden pencils, in other kind of pencils and the kit, and Disney range coming in because Disney also, we got only 15-20 days of sales in Q2. So going forward, we would be adding that sales as well. So overall, it looks like creative, we would be ending up at 25% plus range. And steel bottles, month on month, we have been growing, and the response has been positive, not only from our GT perspective but also general trade perspective, but also e-com and modern trade. So considering all the aspects, all the three divisions going next six months would help us achieve to the numbers what we have committed.
On the margin front?
Margin front, we are improving. We are having slew of measures which we are bringing in in terms of operational efficiency and others also. Like we saw in this quarter also, the raw material cost also, the downward trend of raw material cost helped us. It had spiked up in last quarter where we saw a big gap there. Margin front, we plan to kind of be aiming towards the objective of 19%-20% reach there.
Understood. Thanks. Thank you, team, and all the best.
Thank you. Thank you. The next question comes from Megh Shah from Prospero Tree Financial Services. Please go ahead.
Thanks for the opportunity. Am I audible, sir?
Yeah. Yes.
Sir, my question is not related to a particular quarter, but overall the business because since listing, we are tracking the company, and our quarterly revenue is around INR 250 crore, except this quarter, it is INR 270 crore. So why we are not growing? Is that because our Hauser brand is growing, our own brand, other brand is growing, but overall top line is not growing, though the margin, this time, the GP margin is around 52.8%. But overall, the PBT is around INR 43 crore on every quarter, except the two, three quarters where the PBT was lower. What are the why? Is there anything we investor missing, or something is stopping the company from growing? What exactly is that we want to understand?
So thank you. Overall, if you look at our presentation, our own brands have grown in the last one year, and especially this quarter also, we have grown by more than 15%. And it was only because of the domestic OEM and exports which brought us down, and we could not see the result as per the numbers which we had projected. And also, there was a delay in starting the steel bottle business due to the initial hiccups. So now things are on track. Steel bottles, all the lines are in production. So every month on month, we are improving in that segment as well. And to answer on the margin front, being we had projected a certain number where we would all get up to achieve our targets, and accordingly, we had hired, and we had increased our sales force and the employees at the factory.
But now, looking at the overall numbers, we are on track, and quarterly results have shown that we are slowly, slowly on the upper trend, and we would be on the guidance what we have projected.
Sir, you see, our revenue is from either domestic business or export business. Our export business is coming down, and which is compensated by the growth in the domestic business. But the net net, we stand where we were, around INR 250 crore. So to grow the top line, we have to grow both at the domestic as well as export, or domestic growth must be much more higher than what we lose in the export business. So what step the company is taking to grow the top line as well as the bottom line, sir?
Just quick question, so as you mentioned that Q2, we have seen an upward trend of 270, so going forward, this trend is going to increase from 270 onwards, upwards, and domestic, yes, we are targeting much better results going forward because of all the products which we have planned are going to be launched in Q3 and Q4, so looking on that, I think we are right on track.
So can we expect the higher growth from the Q3 onward?
Yes. Surely.
And at the EBITDA level also because in this quarter, the GP was very nice, but the employee expense and other expense were much higher than the GP growth. So our EBITDA growth is only EBITDA margin is 18.7%. So now onwards, there will be no much growth, no rise in the employee expense as well as the other expense. Is it correct, sir?
Yes, it is correct because as you see, the trend is from Q1 compared to Q2 was in the upper trend, so to get up for the Q3 and Q4, there was some additional cost on the employees or the labor which was incurred, and also, there is a certain impact of the overall increment of last year which completely impacted in the month of July. That's why in Q2, it has a little effect, so going forward, against the increasing demand, there will be not much spike in the labor or the overall employee cost, and this will get corrected in the coming quarters as the sale increases.
So the last trend, any increase in the revenue further will not proportionately increase in the other expense or the operating expense. And thereby, there will be an improvement in the EBITDA margin as well as the EBITDA.
Yes. Yes. This is the trend that we are aiming for.
Okay. Okay. Thank you, sir. Thank you. That's all from my side.
Thank you. A reminder to all the participants, if you wish to register for questions, please press star and one. The next question comes from Richa Mehta from GreenEdge Wealth. Please go ahead.
Yeah. Thank you. So the first question is on the pens. So our competitors did launch the INR 5 pen segment. So have we entered that category? And if yes, then what revenue salience would that be having in our overall pen revenue?
Yeah. So we were cognizant about the fact that the competitors have introduced INR 5 pen, and we launched it in Q2, and the response has been very, very positive. We haven't launched all India. We have launched in certain states due to the capacity constraint, but yes, from this quarter, we are launching pan India, and the response has been very good. We haven't seen any cannibalization happening in the existing business as of yet.
How would you define a premium pen? What is the price point? Is it more than INR 10? Is a premium pen for you? What percentage of revenue comes from, say, the premium part of the pen portfolio?
So there are three categories where we define premium, mid-premium, and max. So max is anything below ₹15 MRP, and mid-premium is from 16-100, and premium is all 100 and above. So if you look at our historical numbers, we have been always maintaining a balance between mid-premium, premium versus max. And that's the reason why we have a good bottom line.
Got it. The second one is on the creative. So here, do we have a separate sales team for creatives versus the pen team? And also, now, what would be the distribution penetration for creatives in our existing network? I believe last time you said it is around 20%. So have we expanded there?
So no, because we haven't expanded in Q2. We are maintaining at same 20%. What we are trying is to improve the throughput per call for each salesman. And also, yes, we have a separate sales team for creative.
Got it. And this BI for sales, we bought also. Has that already been implemented or yet to be implemented?
It's already been implemented.
Are you seeing any?
So a lot of our products that we have launched in the market, especially in the double-wall vacuum product, is already BIS compliant, and that is the norm. So even some of our key buyers from the modern trade and the e-com category are also trending towards buying more of our BIS certified products.
Would you say that so when did this implementation happen? After that, are you seeing that there are regional players who are vacating this space or something to that effect?
So getting BIS certification and to create that kind of a manufacturing line is something which has just started in India because, as you know, this particular segment was probably more concentrated towards the import category. But having the complete manufacturing facility gives us an edge towards launching newer products like we mentioned that we introduced seed products, and even in the coming quarters, we will be launching more and more products. So that gives us an edge. Whereas competition is concerned, yes, there will always be a limitation for import because of this BIS standard. So going forward, we'll see more and more domestic traction and manufacturing in this category.
So my question was that on ground, have we already seen a reduction in competition or not yet? Nothing meaningful as yet?
So competition from the BIS angle, for example, to support the, let's say, MT and e-com, yes, there has been a little limitation from the competition angle. GT is still open, but I think as the BIS standard will get more and more strict in the domestic front overall, this will have an impact on the ground level.
Got it. And the other thing on the employee cost, absolute number around INR 42 crore is what we are at. So can we assume this run rate to be now broadly steady going forward?
Yeah. There won't be any significant.
Major spikes won't be there, right?
Yeah. There won't be any significant increase in this particular line of.
We can assume that for the creatives, new facility, and also the in-house manufacturing that you will start for creatives and also the stainless steel bottles, whatever new laborers, etc., employees had to be added. All those costs are baked into this INR 42 crore kind of run rate, right?
More or less, yes. Of course, a few technicians here and there, but overall, the cost has already been incurred.
Got it. And just last two data questions. So any reason for the gross margin improvement in this quarter?
Sorry. Can you come again?
Any reason for the gross margin improvement in this quarter?
Like I said, the Gross Profit Margin went up this quarter because one is the raw material cost. Last quarter, when we said that there was a spike in the raw material cost, and that actually hit our manufacturing cost. So that eased out, and that helped us to kind of reduce the manufacturing cost. And second is also prudent inventory. So we did some changes in the way we are managing our finished goods stock out here. But that's just to kind of just give you a layer of a lot of things going in this thing. And then there's also third thing is the higher contribution from the premium products. So the Premiumization strategy which we have been planning out and which is also yielding results now. So that has helped us to kind of increase the Gross Profit Margin also.
But largely attributed to raw material cooling off? Would that understanding be right?
Not solely to raw material cost, but the premiumization policy. So more premium products were sold, I would rather say, because of the gifting period and the festival.
Right. Got it. And just the last data question. So I missed the OEM revenue numbers for domestic and export for the current quarter, Q2 FY25, and also for Q2 FY24. If you could share that.
So you want a Q2 number or H1 number?
No, no. Q2 number.
Okay. So Q2 in domestic OEM was at INR 12.5 crore.
Versus last year?
Last year was INR 15 crore. 15.5.
Export OEM for both these quarters?
Export OEM for Q2 was this year at INR 16 crore, and last year was at INR 19 crore.
Right, and you mentioned that in your opening remarks that domestic OEM revenue at this INR 13 crore run rate is expected to be stable, right?
Yes.
Got it. All right. Thank you so much and all the best.
Thank you.
Thank you. The next question comes from Darshan Bhutar from Carnelian Asset Advisors. Please go ahead.
Hi. Just one question from my side. Just wanted to understand that we've seen a slight increase in both our inventory and receivables. So what has led to that, and how should we see it for the rest of the year?
Increase in inventory and?
Receivables. So how do we see the working capital for the rest of the year?
When I look at the receivables out here, I'll just give you the numbers here which we have worked out. The receivables, in fact, from Q1 to Q2 has improved. When I say it was a number, I'll give you the number. It was 86 days, and now it has come down to 85 days. Let's see.
Okay.
Sorry, sorry. I'm getting the wrong numbers out here. It was 83 days, and it has come down to 81 days. That's the receivables. And the inventory, in fact, has come down from 86 to 85. I told you the wrong numbers. Now, we can attribute this because last time, also, we mentioned that we are working on the receivables part where we're putting some strategies and policies in place, and that is going to show colors. When I say 81 days as of Q2, in the Q3, you will see a better number here, and I'll be happy to share that number with you next quarter again. A better number on the receivables. Even in inventory out here, which has always been between 80 to 85, and we are maintaining that because we also increased the number of SKUs, etc.
Those things also work out, and we are planning out some things on the inventory management, better inventory management, everyday kind of endeavor, I would rather say.
Okay. Thank you. And on the steel bottle side, wanted to understand that how is the export going to pan out, and what are you expecting on the export side?
Yeah. Exports, we are working on three new projects for exports, and which is going to be seen in the H1 of next year.
Okay. So any number that you could call out you want to call out?
Numbers? We wouldn't call any numbers at this moment, but yes, we would be sticking to our guidance. What we spoke last time is on track.
Sure. Sure. Thank you.
Sure.
Thank you. The next question comes from Sahil Vora from M&A Associates. Please go ahead.
Hi. Good afternoon. Am I audible?
Yeah. You're audible.
Yes. Sir, from what I have picked up, export of bottles will happen in Q2. How are we utilizing the lines in the meanwhile? Since in the previous calls, you have mentioned that out of three, 1.5 lines are for OEM partner.
Yeah. So in that, what we have done is we have also started manufacturing for our own brand in those lines because all the lines are very fungible. So we just change the mold, and we can produce the whatever shape bottle we want. So we have already started the production, and we have already started selling.
Okay, and sir, you mentioned that the focus is on domestic market for bottles under your own label, so besides that, have you been in talks to white label for any domestic players or modern trade players for their in-house brand, such as Reliance?
Yes. So we are already in touch, and I wouldn't call any name, but yes, we have already started supplying to them.
Understood. Thank you, sir, and all the best.
Thank you.
Thank you. A reminder to all the participants. If you wish to register for questions, please press star and one on your touch-tone phone. The next follow-up question comes from Megh Shah from Prospero Tree Financial Services. Please go ahead.
What is the Creative?
If you can use the handset mode, please. Mr. Shah?
Hello?
Yeah. Am I audible?
Yes, sir. Please go ahead.
Yeah. What is the Creative H1 top line for this year as well as last year? H1?
This year is INR 78 crore, and last year was INR 71 crore.
And Q2?
Q2 was INR 40 crore. 40.7.
Last year?
41 crore. And last year was also INR 41 crore.
Okay. Sir, other known paper stationery players are making growth in the export market. What problems are we facing, and why are we not able to grow in the export market? And do we have any hope of reviving the export market?
Yeah. So I already mentioned that the export market is revived in the last one month, one and a half months. And going forward, also in the next six months, we would be on track because if you look at the absolute numbers, the degrowth is only by 12 crore. And in coming two quarters, I don't see any reason why we would be achieving or growing further that number. And we are super confident on surpassing our last year's number in exports.
Okay. And another question related to the export. In the presentation, we have mentioned that for FY24, the export ASP is 4.1 versus domestic ASP of 5.8. So what are the reasons for lower ASP in the export market, and what steps are we taking to increase it?
So we are not taking any steps to improve it, but yes, because in export market, generally, the mass products are sold in a bigger volume, and that's the reason why you would see the ASP lower compared to domestic market.
Okay. And just one last question. What is the reason for increase in the other expenditures this quarter? Other expenses? Is it due to advertisement cost or any other cost?
So it is a combination of, like we mentioned earlier, it is a little combination of a little increase in the overall employee cost, which is keeping in mind with the upward trend from Q1 to Q2 in terms of overall demand. And as we are confident for the Q3 and Q4, the trend continuing, so these ones have occurred in this particular period.
Sir, I am asking about the increase in the other expenditure, not employee expenses.
In other expenditures, if you see what IT pointed out, there was an increase out here because there were these job work charges, which was there one. Secondly, there was an advertisement expenses also. You would have noted in the previous quarter compared to the previous year, our expenses in the previous quarter for advertisement was very low. We hardly had anything. Like last year, I would say we were at INR 17 crores, and this first quarter itself, we just put INR 1.5 crores. That is where we say we are reigniting or at the restarting on the branding and advertisement expenses, on the branding exercise. That is why we see a spike here in the advertisement expenses. Majorly, it was, if I see a percentage to percentage basis. One second, I can give you the one second.
I have the numbers here, and I can give you the percentage total. The percentage basis, we haven't grown as a percentage of sales, we haven't had much of a gap between the two quarters.
So going forward, do we expect the advertising expense to remain the same?
No. The advertisement expense, like I said, compared to the previous quarter, we have started the branding exercise in this quarter, and hence we look at the future quarters also having a comprehensive advertisement policy and approach, which basically has our various brands, various products which we are introducing now. Like we have introduced the Steel Bottles. We have new creatives coming in. So all these things require some advertisements. And to just answer your question out here, compared to the previous quarter, this quarter, I mean, previous quarter, our total expenses, other expenses were 17.23%, and this quarter, it is 18.44%. It's a percentage of sales.
Okay. So what is the total advertisement budget for FY25?
As a budget, we have capped it as a top-up of INR 14 crores, but obviously, we will see when the time comes, and we will take a call then. So right now, till now, we have expended only about a total of INR 3.144 crores, INR 4 crores, INR 4.5 crores. That's what the number looks like today.
Okay. Okay. Got it. Thank you so much.
Thank you. The next question comes from Danish Mistry from Investor First Advisors. Please go ahead.
Hello, sir, and congratulations on good growth in the creative segment. I just had one clarification to ask, which is that the export growth that we are looking at going forward, is it coming from the pen side or the steel bottle side? That's it from my end. Thank you.
Pen side.
From the pen side and the steel bottles, that anyway, you have said that the exports will start soon, correct?
Yeah.
I'm sorry? Hello?
Yeah. Yeah. Yeah.
Hi.
Yes.
Okay. All right. Thank you very much, sir. Thank you.
Thank you. The next question comes from Rajesh Jain from EV Capital. Please go ahead.
Hi, sir. Good afternoon. Thank you for the opportunity. Just wanted to understand, domestic OEM segment has been lagging for a couple of quarters now. So what are the strategic actions the company will take to protect your downside risk from the OEM partners?
As I mentioned, that domestic OEM is being compensated by the growth of our own brands in domestic market. The downside from here, we don't see any major downside coming in the next couple of quarters.
Understood, sir. And a follow-up was, what are your views? What are the views from the management in terms of any inorganic growth? As your close peers have made announcements towards acquisition or partnering with other players for inorganic growth?
So we are in discussion with a couple of projects, and we would be announcing soon, maybe by next quarter or so.
Okay. What is the space which the company is looking into for inorganic growth, whenever you do announce it?
We are looking at the same space in stationery.
So would it be small pen player or anything into the creative product side or maybe any possibility to acquire your domestic OEM client outright and maybe use your expertise to turn it around?
Yeah. So we are in talks with a couple of guys. As I mentioned, that we will update you soon on that front, for sure.
Got it. Got it, sir. Thank you. Thank you, and all the very best.
Thank you. Participants, you may press star and one to ask a question. The next question comes from Himesh Shah from Cruise Investments. Please go ahead.
Yeah. Hi. Just had one clarification. Disney branded products were launched in September. So how much additional revenue do you think it would contribute in Q3 above your normal growth, of course?
So in Disney, we are expecting at least to contribute to about 10%-15% of our creative sales.
Okay. And are there any plans of starting Steel Bottles in the export markets?
Yes. Yes. Yes. Of course.
Okay. Okay. All right. Thank you.
Thank you. In the interest of time, this was the last question. I would now like to hand the conference over to Mr. Mohit Rathod for closing comments.
Yes. So thank you, everyone, for taking some time out to participate in this call. In case of any queries, reach out to our investor relations advisor, Orient Capital. We wish you all the best and hope to interact with you soon. Thank you so much.
Thank you. On behalf of Flair Writing Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.