Linc Pens & Plastics - Deepak Jalan - CMD
What factors helped you to register consistent performance over the years?
We have to attribute this revenue growth on two aspects. First of all, there is considerable growth in our export. Our share of business in export was low, but the opportunities in the export market are huge. We can confidently say that the rapid growth in the exports is one major factor contributing to our growth. On the domestic front, we have tried focusing hitherto on our traditionally weaker markets i.e. South and West Zones. We have registered good growth in these two new markets while continuing our strong presence in the East and North zones. Thirdly, we keep introducing new products every quarter to add variety to the shelves, thus offering the end consumers a wider bouquet to choose from. Moreover, roping in the Badshah of Bollywood, Mr. Shahrukh Khan as our brand ambassador has made Linc a household name by enhancing our brand recall substantially.
What have been the thrust areas for the company in the recent times?
Our focus will be on exports for the next two years as the growth rate in the export market is higher than the domestic one. Expansion in the Southern and Western domestic market will also be our predominant thrust areas.
What is your market share? How are you planning to expand this?
The estimated size all India market size for pens is about Rs 2500 crore – out of which Rs 2000 crore are in the organized sector and Rs 500 crore in the unorganised sector. Our market share is about 10 per cent at the moment. As mentioned earlier, we are focusing on the new markets of West and South and planning to increase our market-share there.
To enhance our brand recall, we are in to massive promotional campaigns sponsoring four of the IPL Teams Kolkata Knight Riders, King’s Eleven Punjab, Deccan Chargers and Rajasthan Royals. We have increased our brand recall and market presence in the entire country with the help of this sponsorship.
What initiatives are being taken to enhance your overseas presence?
To increase our overseas presence, we participate in International Fairs in at least two countries every year. Appointing new distributors in countries which were unrepresented before is the second major thrust area. To do the same, our export representatives are regularly visiting the target countries.
How about the tie-ups with other global players in order to offer broader and premium range of products to your customers? What are your plans for diversifying to premium range?
We have tie-ups with two international brands-LAMY and Uni-ball. Mitshubishi Pencil Co., producers of Uni-ball pens is an innovative and technologically advanced company with global presence. So this tie-up has helped us in introducing new world class product line in the country. We are not importing any technology as such. The tie-ups also complement our flagship brand and complete the price range- where Linc Pens are priced upto Rs 20, Uniball starts from Rs 20 to Rs 300. LAMY, known more for fountain pens, starts from Rs 300 to Rs 10000. LAMY pens are available in premium retail outlets only. We are promoting Cruiser, a ball point from Linc in the premium segment, which starts from Rs 300 to Rs 11000. So these four brands complement each other in terms of price and technology.
Tell us about the risks and challenges lie ahead for the company.
The biggest risk is the low entry barrier in the pen industry. No wonder new players enter but keep exiting the market soon. This practice upsets the market and disturbs the existing players in general. We have seen that the challenges in export market are lesser than that of the domestic one. We are expanding in the export market and our expectations are also very high.
What kind of financial roadmap is prepared for this FY?
Our financial road map is to grow by 20-25 per cent in the top line so as to become a Rs 500 crore company by 2013-14.
How are you creating value for your investors?
We can say that all the above mentioned aspects can be taken into consideration - like heavy investing in the brand itself, focusing on new domestic markets and expanding export market to increase market share. We are paying dividends consistently ever since we went public. Our payout ratio is always near about 30 per cent. So one-third of the profit is shared with the investors. We paid 18 per cent dividend last year and we are paying same this year too. The market cap has increased in the last two years but I feel it is still grossly undervalued.