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Sunday, June 21, 2009

Linc Pen & Plastic Limited:-What the management has to say

1)Please share with us your view on the current economic climate.

ans)With the formation of the new government at the centre, the economy in general seems to be looking up. However, the economic slowdown would not have a significant impact on the writing instrument industry in general. At present we are primarily focusing on the mass segment, which is unaffected by the slowdown.

2)How well is Linc Pen placed vis-à-vis its peers and what is its competitive edge in the industry?

ans)The industry size is estimated at around Rs 2,000 crores, out of which about Rs 1,500 crores is estimated to be in the organized sector. Linc Pens has an estimated market share of 10% of the overall organized sector. We would be the third largest player in this sector and the market leader in the eastern zone. Our primary competitors would be Cello, Reynolds, Flair, Montex, Lexi etc.

3)Could you give us an update on the company's expansion plans?

ans)Our overall production capacity is about 2 million pens per day, and we strive to enhance our capacity every year, since at least 3-4 new products are required to be launched every year, besides increasing the capacity of some key growing products.

4)Are any alliances or acquisitions coming up this year?

ans)There is nothing lined up as of now of that sort, but we are seeking such opportunities, whether in India or overseas.

5)What is your vision for Linc Pen? Where do you see the company five years down the line?

6)Our vision for Linc Pen is to make it a global brand. In several countries, Linc pens have been accepted quite well and it is expected that Linc pens shall be available at least in 20 countries with decent market shares within next 3 years. Our current market share in the domestic market is about 10%, and we hope to achieve at least 20% market share in the writing instruments category in next 3-5 years. Besides this, we aim to make Linc Pen a Rs 500 crore company by the end of next years by adding related stationery products.

7)Tell us about your financials? What was your topline in fiscal year 2009? What is the guidance for fiscal year 2010 and beyond?

ans)In the financial year 08-09, we had a turnover of around Rs 190 crores. The industry growth rate is estimated at about 7-8%. Most ambitious companies aspire to grow at least by 2-3 times of the industry growth rate and we too are aiming for the same.

8)What are the big challenges and opportunities for the company as well as the industry as a whole?

ans)Availability & affordability of quality manpower in the field of sales is the biggest challenge faced not only in our industry but across all industries. India is quite a fragmented market, and it’s therefore difficult to make penetration in the absence of quality manpower & good infrastructure.Indian companies have growing opportunities in the international markets to the extent that it may soon be replacing China as one of the biggest suppliers of writing instruments to the world.

9)What are the different categories in pens and which are the segments you are present in?

ans)The pen industry could be classified under three popular broad heads as follows:

•Ball Point Pen
• Gel Pen
•Fountain Pen

In recent times, we have witnessed a major decline in the demand of fountain pens and an increase in the demand of gel and ball point pens. Gel pens are more popular with the student community and is growing at a faster rate as compared to the overall writing instrument industry. Linc Pens has an extensive product line covering both ball point and gel pen segments and is extremely popular with students. Pens also could be classified on the basis of the price range. The relevant price ranges would be:
a. Up to Rs. 5 products
b. Rs.10 - 20 product
c. Above Rs.20 (Mass -Premium segment)
Initially, we were focusing on the Rs.5 products and have a plethora of highly accepted brands in this particular segment (Smart, Oceangel to name a few). However over the past few years, we have made a conscious effort to enter the Rs. 10 and above segment and today we have an extensive product line in all the price segments.

10)Would you like to convey any message to the shareholders and investors of the company?

ans)Linc Pen has incredible potential and always believes in taking care of all its stake holders’ interest, which is reflected by its record of regular dividend payments ever since the company was incorporated. There may have been some years when we did not grow as desired, but we are here to stay for long. Our single focus is to make Linc pen a most trusted brand.

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