Linc Ltd (formerly Linc Pen and Plastics Ltd) is expecting to touch the pre-Covid level sales by the end of the current quarter (Q4FY22). Sales should start growing from the beginning of FY23 first quarter backed by an expansion of distribution footprint and focusing towards pushing the average selling price higher with premiumisation of portfolio.

According to Deepak Jalan, Managing Director, Linc, the company reached almost 99 per cent of its pre-Covid sales in Q3 of the current fiscal. For the nine-month ended December 31, 2021, its sales touched 82 per cent of the business during the pre-Covid period.

“Sales during the nine-month period got affected during the first quarter of this fiscal due to the second wave. Again we saw some disruption in sales in January due to third wave. Now since schools and colleges have reopened in February, we should be able to touch pre Covid levels of sales by Q4 end and start growing from first quarter of next fiscal,” Jalan told BusinessLine.

For the quarter ended December 31, 2021, the company registered a 34 per cent rise in revenue from operations at ₹95 crore compared with ₹71 crore same period last year. It also posted a net profit of ₹3 crore, as against a net loss of around one crore in the same period last year.

The company, which is currently present across 1.7 lakh selling points, is looking to add 15,000-20,000 outlets every month moving forward to ramp up its distribution.

As a strategy, it has been expanding to neighbourhood grocery stores, including kirana shops and medical stores, rather than merely focusing on stationery or educational item shops.

Huge potential for growth

Despite schools and colleges continuing to remain closed most of the quarter due to Covid restrictions, the company’s revenue has grown sequentially and YoY. With colleges starting to open in a few states and schools and colleges slated to open in most other states, it expects strong growth in demand for its products in the coming quarters.

India has the largest population in the age bracket of 5-24 years at around 580 million and consists of over 250 million school going students. The domestic education market is expected to be close to $225 billion by FY25, growing at over 13 per cent, Linc said in an investor presentation.

The writing instruments market is estimated to be close to ₹10,000 crore and growing at over 8 per cent. Nearly 80 per cent of revenue comes from pens below ₹ 15 per piece, which is growing at around 8 per cent, while the market priced pabove ₹15 growsiat around 10 per cent. Nearly 55 per cent of consumers are students and around 20 per cent are office goers. The Indian education market is estimated to grow at about a14 per cent, Linc said, highlighting the strong growth potential of the segment. s

Budget estimates for 2022-23 show that the government will spend ₹1,04,278 crore in the coming fiscal year on education, highlighting the huge potential in the segment.

Margins

Though the raw material prices continued to remain heightened due to highcrude price, the company improved GPM (gross processing margin) due to a better sales mix.

EBITDA margin improved handsomely YoY but fell QoQ due to the impact of the increase in GST rates and the company restarting its marketing efforts. However, the company would continue to focus on increasing the share of higher margin products to improve its profitability, he said.

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