DOMS Industries launches Rs 1,200 crore IPO

Umbergaon Gujarat, Dec 4: DOMS Industries, India's second-largest pencil maker and writing instruments player in the Rs 38,000-crore stationery products market, is launching a Rs 1,200 crore Initial Public Offering (IPO) on December 12.

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Public Issue Details

The public issue of the Umbergaon-based firm comprises a fresh issue of Rs 350 crore and an Offer For Sale (OFS) of Rs 850 crore. The issue will close on December 15.

Promoters and Stake Sale

The issue will see the company's Italian partner Fila Fabbrica Italiana Lapis ed Affini, which owns 51 percent in the firm with an investment of about Rs 300 crore since 2012, selling its stake for about Rs 800 crore. The promoter family, led by Santosh Rasiklal Raveshia (Managing Director), Ketan Mansukhlal Rajani (Director), Sanjay Mansukhlal Rajani, and Chandni Vijay Somaiya, will sell their stake through a mix of OFS and fresh equity worth Rs 400 crore.

Post-Issue Shareholding

After the issue, the promoters will continue to hold 75 percent, and Fila will remain the single-largest shareholder, Managing Director Raveshia said during a plant visit.

Umbergaon: The Pencil Town of India

The coastal town of Umbergaon in Gujarat's Valsad district is known as the pencil town of the country, as it is home to the two largest players - Hindustan Pencils, which controls about 40 percent of the market, and DOMS with 30 percent.

Company's Financial Details

As of March 2023, the domestic writing instrument market was Rs 13,350 crore and is expected to grow 16 percent annually through FY28 to touch Rs 27,750 crore. The domestic paper stationery market stood at Rs 16,200 crore in FY23 and is seen growing annually at 12 percent till FY28 to touch Rs 28,700 crore, according to a Technopak report.

Expansion Plans

On the need for expansion, Santosh Raveshia said he expects significant demand growth, and the existing capacity is close to optimal now. The company makes 5.7 million pencils a day or about 1.7 billion units per annum.

Fila's Investment and Global Presence

Fila entered DOMS in 2012, picking up 18.5 percent for Rs 30 crore and then went on to increase the stake to 51 percent, investing Rs 294 crore in multiple tranches. The Milan bourse-listed Fila is into various art materials and stationery products globally. As of December 2022, the company had a revenue of USD 840 million.

DOMS's Production Facilities and Workforce

DOMS has multiple units in Umbergaon and one unit in Bari Brahma in Jammu. Across these plants, the company employs around 7,800, of whom about 7,400 are in Umbergaon.

Financial Performance

The company's revenue rose from Rs 683.6 crore in FY22 to Rs 1,212 crore in FY23, while its net income was at Rs 102.9 crore.

The IPO of DOMS Industries, backed by strong market growth and expansion plans, presents an opportunity for investors to participate in the growing stationery products market in India. With its established presence and leading position in the industry, DOMS is poised to benefit from the increasing demand for writing instruments and art materials.