Link: https://www.icicisecurities.com/Upload/ArticleAttachments/Project%20Om%20-%20Draft%20Red%20Herring%20Prospectus.pdf
Bhubaneswar: DOMS Industries Limited, a leading holistic creative products player in the Indian stationery and art products market has filed its Draft Red Herring Prospectus (“DRHP”) with market regulator Securities and Exchange Board of India (“SEBI”).
The Company’s initial public offering aggregating up to ₹ 12,000 million which comprises a fresh issue aggregating up to Rs 3,500 million and an offer for sale aggregating up to ₹ 8,500 million. The offer for sale comprises of equity shares aggregating up to ₹ 8,000.00 million by corporate promoter, F.I.L.A. – Fabbrica Italiana Lapis ed Affini S.p.A., equity shares aggregating up to ₹ 250 million by Sanjay Mansukhlal Rajani and equity shares aggregating up to ₹ 250 million by Ketan Mansukhlal Rajani.
The funds raised through the fresh issue are proposed to be utilized for the part funding of the cost of establishing a new manufacturing facility to expand the company’s production capabilities for a wide range of writing instruments, water colour pens, markers and highlighters as well as for general corporate purposes.
The company designs, develops, manufactures, and sell a wide range of well-designed, quality stationary and art products, primarily under the flagship brand ‘DOMS’ and sub brands C3, Amariz and Fixy Fix in the domestic market as well as in over 40 countries internationally, covering the US, Africa, Asia Pacific, Europe, and Middle East belt. The product categories which include over 3,770 SKUs, are classified into seven categories including scholastic stationery, scholastic art material, paper stationery, kits and combos, office supplies, hobby and craft and fine art products. As of FY23, the company’s core products such as pencils and mathematical instrument boxes enjoy a market share by value of 29% and 30% respectively. While the product offerings have evolved significantly over the past several years, the largest product ‘pencils’ contributed 31.66% of the gross product sales amounting to ₹ 3,899.88 million in Fiscal 2023. The company has a wide and differentiated presence across multiple product categories and price points which has enabled DOMS to be the fastest growing stationery and art material products company in India in terms of revenue over the period from Fiscal 2020 to Fiscal 2022.
The 11 manufacturing facilities are located in Umbergaon, Gujarat and in Bari Brahma, Jammu and Kashmir. The company has a widespread multi-channel distribution network with a strong pan-India presence. The domestic distribution network for general trade comprises of over 100 super-stockists, and 3,750 distributors along with a dedicated sales team of over 450 personnel covering more than 115,000 retail touch points across 3,500 cities and towns. They also cater to consumers through modern trade and e-commerce.
Education has been an important factor in the economic development of a nation. For the same, the Indian government has been running many programs to promote the sector. India is expected to become $313 billion education market by 2030. With the rising demand for education in India, there has been a tremendous growth in the number of schools, colleges, and other educational institute over the years India, which in turn is going to drive the demand for stationery products. The Indian stationery and art materials market has exhibited continuous growth over the years. It has an estimated size of Rs 38,500 crore by value as of FY 23 and is expected to grow at a CAGR of ~13% during FY 23-28 period to reach a market value of Rs 71,600 crore by FY 28.
The demand for stationery products has also been growing rapidly worldwide, driven by increased literacy rates and education levels. India can capitalize on this demand by producing a diverse range of stationery products at competitive prices. India has a vast availability of raw materials like paper, rubber, plastic, and wood, and also has a competitive advantage in cost-effective manufacturing due to lower labour costs. This helps drive down production costs of stationery products, thus making them more attractive to international buyers. Moreover, the Indian government has taken several steps to promote exports, including the introduction of various schemes and incentives like Make in India, PLI scheme to boost the country’s export potential. India has become one of the major exporting nations in recent decades, which has facilitated the Indian economy to new heights. India has a thriving stationery and art materials industry, and there are several opportunities for the country to become an export hub for stationery products.
DOMS’ focus on developing quality products and offering them at affordable price points, specifically keeping in mind children and young adults, allows them to differentiate their offerings from competitors and gives them a strategic advantage, while capitalizing on industry growth opportunities in India and globally.
JM Financial Limited, BNP Paribas, ICICI Securities Limited and IIFL Securities Limited are the Book Running Lead Managers to the issue. Marathon Capital Advisory Private Limited and ITI Capital Limited have been appointed by the Company as the corporate advisors.
