Strive for success and expand your horizons

Consider this: Think back to your school days when you relied on brands like Apsara, Camlin, Natraj or even Faber Castell for your pencils. Meet Doms, the brand that is revolutionizing the pencil industry. It may seem unusual to delve into the growth strategy of a pencil company, but Doms’ journey is truly remarkable.

Let’s take a look at how a small pencil manufacturer from Umbergaon, Gujarat is poised to achieve annual revenue of over $1 billion. Doms has not only conquered the stationary market but has also surpassed established giants such as Apsara, Nataraj and Camlin.

In the stationery market, four major affiliates dominate the overall industry landscape. Hindustan Pencils stands out as a leading player with renowned brands like Nataraj and Apsara.

With the largest manufacturing unit producing 8 million pencils every day, Hindustan Pencils has a significant presence in the market. Next up is Dandekars, who oversees the Kokuyo and Camlin brands. They have significant influence in the industry.

Lastly we have Santosh Rasiklal Raveshia and his family who lead the Doms. Despite having a fixed market size of approximately $400 billion in India, pencils are perceived as a commoditized product. This has led to increased competition among major players, significantly reducing profitability.

Hindustan Pencils, for example, has seen a notable decline in revenue, plummeting from $90 million in 2015 to about $10 million in 2018. Doms, by contrast, has experienced a remarkable growth trajectory, with revenue soaring from $13 million in 2014 to $26 million in 2018. 2017.

DOMS Industries made an unusual debut on the streets of Dalal. The stock has surged nearly 33% in the past four months. The IPO price range is ₹750 to ₹790 per share.

On December 20, 2023, the shares of DOMS Industries Ltd were listed on NSE at a price of ₹1,400 per share. This is a 77.22% premium over the IPO issue price of ₹790 per share.

So can this iconic brand continue to amass wealth for investors in the future? Well, let’s find out.

DOMS Industry Company Overview

Doms currently holds about 12% of the domestic market share, according to Technopark Report. The market shares of the company’s main products, pencils and math instrument boxes, are 29% and 30%, respectively.

The company operates in more than 45 countries around the world. However, the company’s market dominance is primarily due to its large network of 4,000 distributors with over 1.2 million retail touchpoints.

Its flagship brand, Doms, also includes several other brands and sub-brands, including C3, Amariz and Fixyfix. C3 was created to cater to rural areas by offering less expensive polymer-based pencils instead of traditional wooden pencils.

DOMS Industry Business Segments

Doms Industries, a stationery and office supplies brand, offers a wide range of items. However, the domestic stationery business, including pencils, erasers, and sharpeners, accounts for 45-47% of total revenue.

Next, art materials such as colored pencils and crayons provide 23-26% of income. Kits and combos that combine individual products from the top two groups account for 9-10% of total sales.

The list below includes both the company’s product segments and the individual products sold within those segments.

Finance of the DOMS industry

In FY 2023, DOMS Industries saw significant growth in its revenue, surging 77% to reach ₹1,211.89 crore compared to ₹683.6 crore in FY 2022. After analyzing four years from FY2020 to FY2023, the company recorded a compound annual growth rate (CAGR) of 23%.

At the same time, net profit showed a notable increase, rising 500% from ₹17.14 crore in fiscal 2022 to ₹102.87 crore in fiscal 2023. Cumulative net profit recorded a CAGR of 40% over the four years from fiscal 2020 to fiscal 2023.

In FY23, DOMS Industries maintained favorable financial metrics with a return on equity (ROE) of 35.19% and a return on equity (ROCE) of 34.86%.

Future plans for the DOMS industry

focus on exports

Currently, Doms Industries exports its products to over 45 countries and serves customers across the globe through an established network of channels outside India, with a focus on two segments – exports to FILA Group and third party exports. there is.

We plan to expand our geographic footprint with the support of our global partner, FILA Group. Additionally, we aim to strengthen our distribution capabilities in specific areas. Southeast Asia And African countries.

It is worth noting that India’s contribution to the global stationery products market through exports is relatively small, indicating significant expansion potential.

In addition, it is expected to benefit from the ‘China+1’ strategy to diversify the supply chain beyond China. This strategy can further strengthen India’s stationery exports and contribute to the company’s growth trajectory.

Product portfolio expansion

To expand its product range, DOMS plans to diversify into related categories within the stationery and art materials market, which is largely dominated by informal players in India. Over time, the company has successfully launched numerous creative, innovative and unique products and aims to continue expanding its portfolio.

DOMS also aims to launch products at different price points to improve average profit realization. The company devised a business strategy to diversify its revenue streams by launching products that complement its existing products.

DOMS has also taken strategic steps to expand into growth sectors. This includes the acquisition of a minority stake in toy manufacturer ClapJoy Innovation Private Limited and a majority stake in schoolbag manufacturer Skido. This acquisition signals the company’s commitment to capitalize on opportunities in evolving market segments.

Inorganic growth continues

DOMS is expected to continue its strategy of strategic investments and acquisitions, which could lead to (1) expanding its market share, (2) expanding its overall potential market share, (3) strengthening its presence in various geographies, and (4) ) Enhances backward integration capabilities.

conclusion

DOMS Industries’ remarkable growth trajectory through strategic expansion, product diversification, and inorganic acquisitions positions it for continued success in the stationery market. DOMS aims to capitalize on global opportunities by focusing on exports and leveraging the “China+1” strategy.

As the company moves forward, what do you think about its future prospects? Do you think DOMS will maintain its impressive momentum and solidify its position as an industry leader?

Written by Narine Surya

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