Flair Writing Industries Ltd (FLAIR) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Flair Writing Industries Limited Q2 and H1 FY '27 earnings 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
Moderator: 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. Aryan Sabnani from MUFG NTime. Thank you and over to you, sir.
Aryan Sabnani (MUFG NTime): Thank you. Good afternoon everyone. Welcome to Flair Writing Industries Limited Q2 and H1 FY '27 earnings conference call. Today on the call, we have Mr. Mohit Rathod, Whole-Time Director, Mr. Sumit Rathod, the Whole-Time Director, and Mr. Alpesh Porwal, the Chief Financial Officer. A short disclaimer before we start this call. This call will contain some forward-looking statements which may be based upon our beliefs, opinion, and expectations of the company as of today. These statements are not a guarantee of future performance and will involve unforeseen risks and uncertainties. With that, I would now like to hand over the conference call to Mr. Sumit Rathod, the Whole-Time Director, for his opening remarks. Thank you and over to you, sir.
Sumit Rathod (Flair Writing Industries Ltd): Thank you, Aryan. Good afternoon everyone and a warm welcome to Flair Writing Industries Limited Q2 and H1 FY '27 earnings conference call. Thank you for joining us today. I hope you have had an opportunity to review our financial results, investor presentation, and press release, which have been made available on the stock exchanges. To begin with, I would like to share some perspective on the broader business environment and the developments that shaped our operations during the quarter. We are pleased to announce revenue from operations for Q2 FY '27 grew sequentially to 6.5% at ₹340 crores, which is contributed by an export revenue growth of 13% sequentially, which stood at ₹49 crores. Domestic sales grew by 6% sequentially in Q2 FY '27, increasing to ₹292 crores from ₹276 crores in Q1 FY '27. On a half-yearly basis, domestic sales grew by 11% to ₹568 crores in H1 FY '27 from ₹513 crores in H1 FY '26. Our domestic business has continued to demonstrate resilience despite facing a combination of internal and external challenges during the quarter, including temporary disruption to our manufacturing operations due to the floods in Valsad and Daman facilities. These numbers reflect the underlying strength of our brand and distribution network and the continued demand for our products in the domestic market. Despite the temporary setbacks during the quarter, we have been able to sustain our growth momentum, which is encouraging. Our broader strategy remains intact, with a continued focus on building a more balanced portfolio by strengthening our core writing instruments business while expanding our presence across creative products and steel bottles and houseware with continuous endeavor to increase the compensation of the business between pen and non-pen categories, targeting to 60 and 40% respectively. We have taken necessary steps in expanding our manufacturing facilities for Creative in Surat and upcoming Valsad facility. We also expect to commence commercial operations of new fourth line for steel bottles in Q4 FY '27. On the corporate governance front, as approved at our recent AGM, we have appointed PricewaterhouseCoopers as a statutory advisor for Flair Writing Industries Limited. This is an important step in our continued efforts towards enhancing governance standards, transparency, and institutional processes as we grow the business. We are pleased to inform you that the Board of Directors have approved an interim dividend of 10% amounting to 50 paisa per share as part of distribution strategies for our shareholders. Overall, we remain confident in our long-term prospects of Flair. We will We continue to navigate near-term challenges. Our focus remains strengthening our businesses, expanding our portfolio, and delivering sustainable growth. As a part of our business expansion and growth, we are looking for potential acquisition in the creative segment. I would like to thank all our shareholders and stakeholders for their continued trust and for being part of Flair's growth journey. Now I hand it over to our CFO, Mr. Alpesh Porwal, to take you through the update on broader business and company financials.
Alpesh Porwal (Flair Writing Industries Ltd): Thank you, Sumit. Let me take you all through the business and financial performance of the company for Q2 and H1 FY '27.
Alpesh Porwal (Flair Writing Industries Ltd): The first half of FY27 has been characterized by a challenging and evolving operating environment, with a combination of domestic and international factors influencing business activities. Our gross profit and EBITDA margins have been impacted by elevated raw material costs, primarily arising from the ongoing geopolitical situation in West Asia, along with the resulting supply-side disruptions and price volatility. Despite these pressures, we have remained focused on protecting our margins through a combination of cost rationalization, operational efficiencies, targeted promotional schemes, and selective price increases across our product portfolio. These initiatives have helped us partially mitigate the impact of input costs inflation. While the long-term while the long-term fundamentals of the Indian consumer products and stationery industry remain encouraging, the second quarter witnessed certain exceptional developments that temporarily affected the normal course of our operations. One of the key challenges during the quarter was the exceptionally heavy rainfall and flooding in parts of Western India, particularly Gujarat, which impacted our manufacturing facilities at Valsad and Daman. The intensity of the rainfall resulted in temporary disruptions to manufacturing activities, employee movement, and the broader supply chain. Our Valsad and Daman facilities remained non-operational for an average of approximately 15 days and 7 days, respectively, during the quarter. The situation was further compounded by temporary workforce shortages as some employees took additional time to resume work following the floods, resulting in delays in restoring normal production levels. The combined impact of these disruptions is estimated to have resulted in a revenue loss of approximately 25 crores during the quarter. In the absence of these exceptional disruptions, our quarterly revenue growth could have been approximately 7 to 8% higher than the reported level. These were clearly exceptional circumstances, largely beyond our control, which had a temporary bearing on our operating performance. However, our team responded with considerable agility and focus to restore operations and minimize the overall impact. I am pleased to share that manufacturing activities at both facilities have now returned to normalcy. Our immediate priority is to improve production efficiencies, strengthen supply continuity, and recover the business momentum through the coming quarters. We are confident that the normalization of operations will support a stronger performance in Q3 and the second half of FY27. Alongside these alongside these domestic challenges, continuing geopolitical uncertainties, particularly in West Asia, have also influenced the broader business environment. These developments have impacted international trade flows, logistics arrangements, freight costs, and certain supply chains. Given our presence across multiple international markets, including the Middle East, these developments have created additional complexities in managing export operations and servicing customers across geographies. While these uncertainties may continue to pose near-term challenges, we remain committed to diversifying our geographical presence and broadening our international market reach. We are witnessing encouraging traction across several other export markets, particularly South America, Africa, and other Asian countries. Our efforts are directed towards expanding our customer base in these geographies, reducing geographical concentration, and building a more balanced and diversified export business over the medium to long-term. Despite the near-term challenges, we remain confident about the underlying strength and fundamentals of our business. Our established brand portfolio, diversified product offerings, manufacturing capabilities, and extensive distribution network
Alpesh Porwal (Flair Writing Industries Ltd): provide us with a strong foundation for sustainable growth. Our focus remains on navigating the current environment effectively while continuing to strengthen our competitive positioning and create long-term value for all stakeholders. Coming to our business developments, Flair continues to operate across three key segments: writing instruments, creative products, and steel bottles and houseware. Our core writing instrument business remains the foundation of our operations while our newer categories are progressively expanding our addressable market and broadening our overall consumer products portfolio. The Indian stationery and arts material industry continues to offer meaningful, long-term opportunities supported by increasing consumer preference for branded products, continuous product innovation, and the gradual expansion of organized distribution. Within this evolving landscape, we remain focused on strengthening our market position through product development, distribution expansion, and deeper penetration across consumer segments. While the broader Indian and global writing instrument markets are expected to grow at relatively modest low single-digit rates, our writing instrument business continues to outperform the industry driven by the strength of our established brands, diversified product portfolio, and extensive distribution network. The segment has maintained a consistent growth trajectory, delivering 7% growth during H1 FY27. This performance reinforces the resilience of our core business and our ability to gain market share and grow ahead of the underlying industry. Our broader strategy remains centered on building a more diversified consumer products company with creative products and steel bottles and houseware emerging as important growth drivers alongside our established writing instruments business. Our creative product segment delivered an encouraging 24% year-on-year growth during H1 FY27 reflecting sustained consumer traction and continued expansion of our product portfolio. We remain focused on accelerating this momentum through regular new SKU launches, innovative product introductions, and a wider range of offerings aligned with evolving consumer preferences. We believe that product innovation, portfolio expansion, and deeper market penetration will continue to be the key drivers of growth in this segment. In our steel bottles and houseware business, we are progressing well with our planned capacity expansion. The fourth stainless steel bottle manufacturing line is expected to be ready for commercial production by Q4 FY27. The additional capacity will further strengthen our manufacturing capabilities, provide greater flexibility for product and portfolio expansion, and position us to capitalize on the growing opportunities in this category. Collectively, these initiatives reflect our continued commitment to building a diversified consumer products business with multiple growth engines contributing to our long-term aspirations. Having discussed the broader operating environment and developments across our businesses, I would now like to take you through our financial performance for the quarter and the first half of FY27. As highlighted earlier, our reported performance during the quarter reflects the impact of the exceptional weather-related disruptions at our manufacturing facilities, along with the prevailing geopolitical environment and associated operating challenges. Notwithstanding these factors, we continued to register growth in our top line. Revenue from operations for Q2 FY27 stood at 340.1 crore, representing a sequential growth of 6.5%. For H1 FY27, revenue from operations grew by 8.2% year-on-year to 659.4 crores. On the profitability front, EBITDA for the quarter stood at 50.6 crores with an EBITDA margin of 14.9%. Importantly, we witnessed a sequential improvement in our profitability, with profit after tax increasing by 9.1
Alpesh Porwal (Flair Writing Industries Ltd): percent quarter-on-quarter to 31.7 crores and margin improvement by 20 bps to 9.3%. This improvement reflects our continued focus on operational efficiencies, cost management and disciplined execution even in a challenging cost environment. On the working capital front, on the working capital front, our net working capital days increased marginally from 139 days in FY26 to 145 days in H1 FY27. This was primarily driven by an increase in inventory and debtor days. Inventory days increased from 94 to 104 days mainly due to advance stocking undertaken during the initial part of the quarter to take advantage of lower raw material prices. At the same time, debtor days increased from 78 to 84 days primarily due to slower collections in the export market. These two factors contributed to the increase in the overall working capital days during the period. Our focus remains on ensuring supply continuity while maintaining disciplined inventory and working capital management. Looking ahead, we remain positive about the long-term growth prospects of our business and the opportunities across our established and emerging product categories. While the first half of FY27 has presented certain exceptional challenges, we believe the underlying growth drivers of our business remain firmly in place. With manufacturing operations now normalized, continued investment in capacity, an expanding product portfolio, and encouraging traction across our newer categories and export markets, we are well positioned to build stronger momentum in the coming quarters. Historically, the second half of the financial year has been stronger for our business and we expect this seasonal trend, together with the normalization of operations, to support our performance in H2 FY27. Despite the disruptions experienced during the first half, we remain confident of delivering annual revenue growth of 12% or higher in FY27. Beyond FY27, our medium term growth aspirations remain intact, and we would like to reiterate our guidance of of approximately 15% year-on-year revenue growth. We remain focused on delivering this growth through a combination of market share gains in our core writing instrument business, accelerated expansion of creative products and steel bottles in houseware, wider geographical penetration, and continued investments in manufacturing and distribution capabilities. While the external environment may remain dynamic, our priorities are clear: strengthen our core businesses, scale our emerging categories, improve operating efficiencies and maintain financial discipline. We believe the strength of our brands, our diversified business model and our execution capabilities provide us with a solid foundation to deliver sustainable growth and create long-term shareholder value. With this, I would like to conclude my opening remarks and hand over the call to the moderator to open the floor for questions.
Moderator: Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Jinesh Joshi from PL Capital. Please go ahead. Jinesh, your line is unmuted. Please go ahead with your question.
Jinesh Joshi (PL Capital): Am I audible?
Moderator: Yes, please go ahead.
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