Flair Writing Industries Ltd (NSE: FLAIR) Q3 2025 Earnings Call dated Feb. 03, 2025
Corporate Participants:
Vimalchand Jugraj Rathod — Managing Director
Alpesh Porwal — Chief Financial Officer
Sumit Rathod — Whole-Time Director
Unidentified Speaker
Analysts:
Divyansh Sarda — Analyst
Aradhana Jain — Analyst
Sneha Talreja — Analyst
Shraddha Kapadia — Analyst
Resha Mehta — Analyst
Naitik Mutha — Analyst
Ananya Nichani — Analyst
Sahil Vora — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Flair Writing Industries Limited Q3 and 9M FY ’25 Earnings Conference Call hosted by Orient Capital. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator pressing star than zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Divyansh Sarda from Orient Capital. Thank you, and over to you, Mr.
Divyansh Sarda — Analyst
Good afternoon, everyone. Welcome to Flair Riding Industries Q3 and nine months FY ’25 Earnings conference call. Today on the call, we have Mr Vimal, the Managing Director; Mr Mohit Rathad, Whole-Time Director; Mr Sumit Rathad, Whole-Time Director; and Mr Alpesh Porwal, the Chief Financial Officer. Short disclaimer before we start this call. This call may will contain some forward-looking statements, which will be based upon our beliefs, opinion and expectations of the company as of today. These statements are not a guarantee of future performance and will involve unforeseen risks and uncertainties.
With that, I would now like to hand over the conference to Mr Vimal Chandra, Managing Director for his opening remarks. Thank you, and over to you, sir.
Vimalchand Jugraj Rathod — Managing Director
Thank you. Good afternoon, everyone. I want to express my gratitude to all the participants who have joined the call. I hope everyone had the opportunity to go through our investor presentation and press release that we have on the. The quarter gone by — was a pivotal quarter marked by many positives. We continued our growth momentum across existing segments while laying foundations for new avenues for growth. All our divisions delivered healthy growth in both domestic and export markets. Our brand remained the engine for all our propertization, but it was particularly related to note the pickup in OEM sales.
Among the key highlights of the quarter was our announcement of strategic partnership with the MAPED front for distribution of products. Second initiative was towards boosting our presence in the pencil segment. We launched a range of mechanical pencils, which gave a feeling of writing with a free wooden pencil. Currently, we are manufacturing mechanical pencil and soon we are going to start manufacturing polymer pencils, wooden pencils and other new stationary items through one of our new subsidiaries.
Pencil form a substantial portion of our overall stationary and writing instruments segment and thus we have segmented our ability to address this segment via in-house manufacturing of both wooden and mechanical pencil. I’m also delighted to announce that we have got award as top exporter by Flex for the year ’21, ’22 and ’22 ’23 and one of the best brands of 2024 by ET yields, underscoring the strong brand recall among customers and our efforts to build brand value over the years.
The upcoming quarter-four is always our strongest quarter in terms of demand-driven by upcoming exam season and our push in the export market. With organic tailwinds to our biggest segment of the upcoming quarter and continued growth of momentum in creative and steel bottles, we are optimistic of our performance and look to close the year-on a high-level.
I now hand over the call to Mr Alpesh Gorwal, our CFO, to discuss financial performance.
Alpesh Porwal — Chief Financial Officer
Thank you,, and good afternoon, everybody. Moving to the consolidated performance of the company for Q3 FY ’25. Revenue from operations for Q3 FY ’25 was at INR265 crores, an increase of 17.6% year-on-year. Gross profit for the quarter was INR137 crores, which increased by 17% on year-on-year basis. Gross profit margins came in at 51.9%, largely stable year-on-year. EBITDA for the quarter was INR45 crores, increasing by 31.1% on year-on-year basis. EBITDA margin was at 17.1%. We saw an impressive margin expansion of 176 basis-points year-on-year. Profit-after-tax for the quarter was at INR29 crores, increasing by 54% on year-on-year basis and profit-after-tax margin for the quarter was at 11.1%. PAT margins expanded by 262 basis-points.
Moving to the nine monthly results, consolidated performance of the company for nine months FY ’25. Revenue from operations for Nine-Month FY ’25 was at INR782 crores, an increase of 7.3% year-on-year. Gross profit for the nine months was at INR403 crores, which increased by 9.4% on a year-on-year basis. Gross profit margin came in at 51.5%. Gross profit margins expanded by 100 bps. EBITDA for the Nine-Month was at INR138 crores, declining by 2% year-on-year. EBITDA margin was at 17.6%. Profit-after-tax for the nine months was at INR88 crores, improving 4.7% year-on-year. Profit-after-tax margin for the quarter was at 11.3%.
On the qualitative front for the quarter, delegated efforts towards rationalization of resources to enhance efficiencies over the past quarters have started to gradually bear fruit. During the quarter, employee benefit expenses increased by 14.3% on a year-on-year basis and other expenses increased by 8.4% year-on-year, both coming in lower than gross profit rise of 17% year-on-year as shared above. This controlled rise in expenses enabled EBITDA margin expansion, thus allowing us to enjoy some operating leverage on a yearly basis. Sequentially, both employee cost and other expenses remain in-line at a combined outlay of INR91.9 crores in Q3 ’25 as compared to INR92.2 crores in the second-quarter of ’25.
Thus, the marginal decline across key metrics quarter-to-quarter essentially flowed from higher gross margin in the previous quarter. Our net-debt negative status enabled lower interest costs on a yearly and sequential basis, while ongoing capex program is leading the natural increase in depreciation. We will continue to invest in our teams and optimizing our sales and distribution structure to unlock higher efficiencies with medium-term outlook. We made additions across functional areas of sales, manufacturing and administration. So overall, while these outlay toward employee expenses and other expenses may seem on the elevated front from outside looking in. These are necessary investments today to drive growth forward.
I would now like to hand over to Mr Sumit Rathour, our Whole-Time Director, for insights into each business segment.
Sumit Rathod — Whole-Time Director
Thank you, Alpesh. Good afternoon, everyone. We achieved healthy year-on-year growth across all business segments. Our own brand sales have gone from strength-to-strength with rise registered across domestic and export markets. Domestic owned brand sales have increased 14% year-on-year to INR206 crores. Export owned brand sales increased by 33% on a year-to-year basis to clock INR26 crores. Exports are stronger in the second-half of the year for us and this is further evidenced by 17% sequential rise in exports owned brand sales. Thus overall own brand sales grew by 15% year-on-year to INR23 — INR232 crores. For nine months, this number stands at INR689 crores, registering a 10% growth.
Coming on to the product segments, first the PENS business. The PEN segment grew 10% year-on-year to INR197 crores. The segment also reported a 3% growth on nine-month basis to INR606 crores, which was heartening to note given the flat performance during the first two quarters of this year. There has always been a seasonality to the demand during the 3rd-quarter in terms of school holidays combined with festivities, subduing demand for this category as customer spending gets directed to other products.
However, as highlighted by our Managing Director earlier, the upcoming quarter-four is our strongest quarter from business point-of-view and we are quite optimistic for the demand uptick for PEN segment to continue. During this quarter, we released 33 new PENs, of which 29 are targeted to mid-premium and premium segments and four new pens launched in newest price category of INR10. We continue to execute on our premiumization strategy with majority of new releases geared towards the mid-premium and premium segments.
The Creative segment achieved a 10-year — 10% year-on-year growth for both Q3 FY ’25 as well as nine-month FY ’25. The revenue contribution stood at INR45 crores for the quarter and INR123 crores for the nine months. We expand our portfolio by introducing 16 fresh offerings under the creative range during the quarter. Notably amongst them has been the launch of our new 2 MM mechanical pencil range. It is a substantial substitute to the traditional wooden pencils and comes in a range of and Disney branded pencils. This launch further strengthens our positioning in the pencil segment, which remains a material part of the overall writing instrument category.
We took another decisive step-in the overall development of a creative brand by partnering up with Maped. Maped is a French brand that has been in existence for close to eight decades. They manufacture quality and premium stationery products and with this partnership, we will leverage our extensive network of distributors and retail touchpoints to distribute product in India. While this is not only — this not only gives us an opportunity to generate incremental growth for the company as a whole, it increases our basket of offering under the Creative segment to the distributors. Product will primarily be catering to the premium segment of stationery products and thus also enable us to offer products all price ranges.
The collaboration with Disney is progressing well. We now manufacture and distribute 20 Disney branded products across categories. We continue to scale the steel bottle segment as the revenue contribution for the quarter more than tripled to INR12 crores. On a nine-month basis, the segment has generated INR32 crores in revenue providing us the substantial growth delta. We added three new bottles during the quarter to our portfolio and look towards two key levers for growth in the business, providing quality and attractive bottles and increasing distribution reach.
We remain steadfast to our core strategies for sustainable growth. These include innovation and feedback-driven portfolio expansion addressing market requirement across price points, deepening distribution throughput from our existing network, exploring partnership and new avenues for growth, focusing on quality operations with a great share on in-house manufacturing. Concentrated efforts for successful execution of premiumization policy.
Thank you and I request moderator to open the floor for Q&A session.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles.
The first question comes from the line of Jain with B&K Securities. Please go-ahead.
Aradhana Jain
Hello hello. Hello. Hello. Go-ahead. Taking my question and congratulations on the good set of numbers. My first question is on the top-line growth, if I see for nine months, that stands at 7% versus the full-year guidance that was given to us was around 11% 12%. That implies that company will have to grow at 20% plus in 4Q. While in the opening remarks, you did mention that 4Q is your best quarter. Are we still on-track to see such sort of growth and what would be the growth in 4th-quarter? That’s my first question.
Sumit Rathod
Yeah, hi. So looking at the numbers, in Q4, of course, it is one of our strongest quarter considering the market sentiments. And at the same time, we are very confident on achieving a double-digit growth in the current year.
Aradhana Jain
So what would be the drivers for that? Mostly like would it be from or creatives for a combination.
Sumit Rathod
With the combination of all three segments. Pen, of course, as you have seen in Q3, we grew by 10%. Going-forward in Q4 also, we are targeting the same number. And going-forward to creative, of course, the number — the growth will be better and higher because as we are giving the guidance of — maintaining the guidance of 80% to 20% growth in Creative and steel bottles also — the traction is good as we said earlier also. And going-forward also, we are maintaining the same momentum in Q4 as well.
Aradhana Jain
Okay. While the steel bottles did grow on a year-on-year basis, the growth in steel bottles, but if I see on a sequential basis, it was flat. So any thoughts on that, that why was it flat in Q-o-Q basis?
Sumit Rathod
So in this category, Q3 is a slow period because most of the buying happens before the festival season. So normally there is a lull of almost 30 to 40 days. And after that, again, the demands pick-up. So it’s a normal tendency in Q3. The numbers are a little low. But as you can see, we have maintained the top-line compared to Q2 and Q3 is we have maintained the numbers.
Aradhana Jain
All right. Separately on the margins, while the EBITDA margin has improved on year-on-year basis, it is sequentially lower and overall below the guidance of 90% to 20% for FY ’25. So what are the margin improvement levers? And by when do we expect it to start reflecting on the numbers?
Alpesh Porwal
On the margin front, let me take a moment off here how — when you said the margins are lower than historical levels. That’s your question, right?
Aradhana Jain
Sequentially, it’s lower.
Alpesh Porwal
Sequentially, sure. Let me just give you a brief on the margins out here. See, over the — if you look at the financials, over the Nine-Month FY ’25, gross margins overall have actually been better for the company by a full 1 percentage point over nine months due to the rising share of premium products in the mix. During the first-half, we had faced elevated freight costs, which we had discussed earlier in our calls also. We faced elevated freight costs in the export markets, which also contributed to the rise in the other expense. Internally, a higher headcount and job work outsourcing raised employee costs and other expenses.
And additionally, if you see now actions — the actions were also undertaken to optimize distribution network. Thus overall below our GP margin, both employee expense and other expenses have remained elevated year-on-year. That’s the true from the financial see them. Below the EBITDA, higher other income on high cash balance and lower interest cost on-net debt zero balance sheet. That ensures that we substantially reduce the margin differences at the EBITDA level and achieve somewhat a parity of PAT margins for the previous nine months basis.
All these initiatives are not just for a single quarter, we see, but are critical to ensure an organic buildup capability to scale our overall business. If you see the margins, the explanation for the lower-margin sequentially is also because we are also yielding a good operating leverage over here in terms of all these last 3/4, which you see?
Aradhana Jain
Okay. But the current levels of 17.5%, 17.6%, we see that improving to, 19% 20% by when? Like do we have any guidance on that?
Alpesh Porwal
Right. So in the next two, 3/4, we see the numbers going back to, 19% 19.5%. See, where we today, the reason is very simple. As we continue to invest in our teams and optimize our sales and distribution structure, structure basically to unlock higher efficiencies. We are making additions across functional areas of sales and manufacturing. And these are necessary investments today to drive growth forward. And as we grow, we will see our margins also improving because these investments will start paying-off in the coming quarters.
Aradhana Jain
Understood. Understood. Just one more. On capex, I have a very basic question. In FY ’24, we did around INR110 crores of capex in FY ’25 around again INR100 crores of capex is what we are aiming at, I guess, from the PPT. So will it be possible for you to provide us segment-wise, how much have you incurred like towards 10s, towards creative, towards steel bottles, how much capex has been incurred for each segment?
Alpesh Porwal
The The numbers I won’t be able to give you right away. We will share with you later. But then let me just share with you that today we are doing in the process of doing a backward integration where we bring about an economies — operating economies out here. We are adding capex in all these segments. Still we have already done and going-forward as the numbers improve, we are planning that the numbers will go up beyond the capacity which we have built-up today. We’ll have to-end up having a separate outlay plans for steel bottles also. So going-forward, yes, at least all three segments is what we are looking at adding a capex.
Aradhana Jain
Sure. So maybe I’ll get-in touch with all right. Thank you so much and all the best.
Alpesh Porwal
Sure. Thank you.
Operator
Thank you. Next question comes from the line of with Nuvama. Please go-ahead.
Sneha Talreja
Hi, good afternoon, team and thanks for the opportunity. Just a couple of questions while you’ve answered most of them in the previous participants. A couple of them. On — even in the side, do you feel in the own branded business, we’ve seen a significant drop-in terms of quarter-on-quarter revenue. What would be the reason why not bottle side, we said it was festivities because of which there was backloging. What about the spend side of it? We’ve seen revenues going down there on a basis.
Sumit Rathod
So if you — if you would have noticed, if you — if you compare historic numbers also, the pen business always in Q3 because of the holiday season and festivities is relatively lower compared to Q2. So that’s the reason why if you see sequentially the pen business looks down. But overall, if you see the numbers are better in terms of compared to-Q1 — Q1 — Q3 last year and Q3 this year.
Sneha Talreja
Understood. So you expect the Q4 again a strong rebound similar to you know, previous year’s numbers.
Sumit Rathod
Right, exactly.
Alpesh Porwal
It’s near the cyclical thing has become more evident now where we see in all the categories where we see all these consumer categories, we see that Q2 has been on the lower side. Just for numbers, the previous year also, our Q2 to Q3, we saw a lower top-line of 12%. And this year we have — the difference is about 2.1% is what we look at. So probably the silver lining or what we say the hope is that like what we have maintained, we have been able to maintain these numbers well in this year. So we didn’t see that much of a — so we are actually narrowing the gap between the dip of Q2 to Q3. I mean, just on the positive side, I would say.
Sneha Talreja
Understood. I just wanted to get some sense on, you know partnership that we have done. What are the things that we are planning to look at? What segment do they operate in or what’s the visibility out there or some colors there?
Vimalchand Jugraj Rathod
So maybe as Sumit mentioned, it’s a — it has a legacy of eight decades and they are primarily into a stationary products, which is currently missing in our current portfolio of creative products. So it’s going to help us get into that segment. And going-forward also, overall the creative growth is going to be very, very positive with the help of joining the Creative division?
Sneha Talreja
Understood. And lastly, on the margin front, although you said that be back to about 19% 19.5% sort of a margin from next quarter itself, even if I consider that to be 19-odd percent, this year margin guidance will go down from 19% to 20% to about 17% to 18%, is my assumption correct?
Alpesh Porwal
I would actually not comment on the exact numbers, but this is where growing — going to be heading to. So when I say, 19%, 19.5% in the next two, 3/4, we see the marginal improvement in margins starting from this quarter onwards. That’s the last quarter in a way you’re right. Let’s see the improvement here.
Sneha Talreja
Understood. Thanks a lot and I’ll get back-in the queue. Thank you.
Operator
Thank you. Next question comes from the line of Shrad Dhakapadia with Share India. Please go-ahead.
Shraddha Kapadia
Morning. Thank you so much for the opportunity and congratulations on the good set of numbers. So I had a few bookkeeping questions. So if you could give us the breakup of the contribution in terms of your, PCI and House for 3Q and Nine-Month last year and this year good.
Sumit Rathod
So overall, if you look at the numbers, we do not, you know, provide the brand-wise sales. But of course, if you look at our own brand sales, you know the growth nine months has been in double-digit, which is 10% plus of our own branded sales.
Shraddha Kapadia
No, so basically for the flare, Garden and, if you could give the breakup in the pen segment.
Sumit Rathod
Yeah. So what we will do is we will ask our IR agency to get-in touch with you as with all the breakups.
Shraddha Kapadia
Okay. Okay, sure. Not a issue. Also if you could give the average selling price for this quarter.
Sumit Rathod
The average selling price
Shraddha Kapadia
Yeah
Sumit Rathod
It’s about INR5.7 rupees.
Shraddha Kapadia
Okay, okay, okay. And so now I’ll come to your subsidies and all. So if you could help us understand that how the Stationery and the Flomax stationery, how have they contributed to the consolidated financials? And what do we expect from them in future.
Sumit Rathod
So both the — both the subsidiaries are the — our initiative to accelerate the growth of creative products. And you know one is going to help us in, which will again help us in creative and the other is to do with more to do with the pencil manufacturing and polymer pencil manufacturing. So both are our initiation — initiative to accelerate the growth of creative, which going-forward in next three years, we are targeting almost around 26% 50%.
Shraddha Kapadia
Okay. So I just wanted to understand whether they have already started to contribute from this quarter to our top-line or not or how is it’s expected to contribute in the future.
Alpesh Porwal
So what has happened is in Rosa, we have started — we’ve just started the distribution of maybe products. Whereas in, we are setting up the unit there. So once the units are set-up, we’ll have the manufacturing facility there. And Monte Rosa is more of a distribution channel, which we have developed. So these are two different things which have just recently started. One has started. One, as we set it up, we’ll see the contribution coming from there. So to answer your first question, earlier question, the contribution to the top-line today is just a nominal next time just started, so we’ll see the numbers.
Shraddha Kapadia
Okay. Okay. Okay. Okay. Thank you so much. I’ll come up in the queue for the future. Thanks.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Resha Mehta with GreenH Wealth. Please go-ahead.
Resha Mehta
Thank you. Yeah, thank you and congrats for some growth revival quarter-on-quarter. So the first question is on the creative side. So if we see the quarter-on-quarter growth in this segment is low at 10%. So I would imagine that if we are on such a low-base in terms of absolute revenues, quarter-on-quarter 10% growth, would you say that is subdued or is this something that you know we had planned for? Why are we basically not able to ramp-up quickly? Because as I recall in one of your last calls, you had mentioned there was some problem with our outsourcing vendor. So is that still an issue or is there some other reason for low-growth?
Sumit Rathod
So we have take that problem by the end of November. So we are — now we are back on-track and you will see the growth in the current quarter, a significant growth, which will make-up for the entire year.
Resha Mehta
Okay. And now what would be the share of in-sourcing in creative?
Sumit Rathod
It’s still at 50%.
Resha Mehta
And plans to take this up to what percent by when?
Sumit Rathod
25% by the end of ’26.
Resha Mehta
Okay. So it will be 75% by FY ’26, right?
Sumit Rathod
Yeah.
Resha Mehta
Got it. And what would — would there be any margins that we enjoy or is it — is it at a breakeven level, the creative segment EBITDA margins would — how dilutive would that be to our overall margins?
Sumit Rathod
So we don’t have a separate, you know category-wise margin breakup. But if you look at the overall, it’s at the similar level as.
Alpesh Porwal
So what happens out here is that we always try to kind of we invest in products and segments where we see the margins are at between 18% to 20% on an average. While we started investing in creative segment now and as we — as we at least build the entire segment here, the margins can be a little on the lower side from that particular segment. But as it grows and we reach the optimum level, we’ll reach at the same margin levels of 18.5% to 19.5 percentage. So the investments initially, obviously, you understand that, that whenever we make investment in something new, the margins will start-up on lower margins. It takes — it takes a little time to kind of ramp-up and here in Creative, we are also doing the backward integration. So the manufacturing facility out here, we are increasing plus the new subsidiaries, which we see out there, the manufacturing facility there also increase, which will go up to increase our margin — in-house manufacturing basically.
Resha Mehta
Right. So just alluding to the previous participants’ question on the margin front, right? So, 19% 19.5%, while you did mention we plan to get there in the next two to 3/4, right? But just wanted to understand, so basically the this increase will happen because the investments that we’ve made will start bearing fruits and the high freight costs in the exports market will come down. And also your new segments of creatives and bottles will also kind of you know, reach the PEN level margins. Is that understanding correct that these are going to be the key levers which kind of help you largely.
Alpesh Porwal
Largely, yes, you are right. So it’s going to be a mix of everything. So the backward integration and the new manufacturing facility in terms of partnerships which we have got into our subsidiaries which we have created, both put together will give us the higher-margin, not sure. Will lead to that.
Resha Mehta
Yeah. On the export side, sir, do we export any creative segment product currently and also for the bottles, have we started exporting to our OEM customers?
Sumit Rathod
Creative, we do export to the international market. But it’s a very small segment. We are still building up the manufacturing base and once the in-house manufacturing increases, that’s where the actual price point for the international market will come in. And for the steel bottle, we have like we mentioned earlier, we have started a little bit in our own brand for the steel bottles. And going-forward, we are planning to, you know, expand that business as well in the export market.
Resha Mehta
Sorry, so you said that for the steel bottle, you have started exporting in your — in your own brand.
Sumit Rathod
Is that your trial export has started in our own brand and going-forward, we are planning to increase that category level.
Resha Mehta
Okay. And on the steel bottles, have you seen any lowering of guidance here because I think I recall FY ’27 we had guided for INR125 crore revenue while now we are stating INR100 crores. So is it a lowering of guidance here or no.
Alpesh Porwal
We have always maintained that we’ll reach the full capacity of INR120 crores, not even 100 in the third year of operations. So by ’27, we look at INR120 crores of — that’s the guidance we have been maintaining and we are reaching there.
Resha Mehta
And in terms of distribution expansion for the steel bottle, so while we are there in most of the modern trade and exports also like you said, we have started a little bit, right? So do we plan to enter GT or no, we essentially wanted to be a modern trade-in an export fleet initially and then perhaps we look at entering GT?
Sumit Rathod
No, so we have already started general trade and currently we have about 50 distributors city-wise and the GDE traction is also very encouraging looking at the numbers.
Unidentified Speaker
The range of products were
Resha Mehta
Understood. And just last two questions, right? So one is on the export side. So on the export side, sir, suddenly, what is it that it is leading to such a healthy growth that we’ve seen because like you said creatives and bottles, if any is a very, very small negligible segment currently. And the initial reason that we have been fighting for low export growth for the PENs was that the freight costs were pretty high. And as I understand, the freight costs are still high. They have not yet come off a lot, right? So what really is driving this pen export growth? Have we added new OEM customers or what is it? Because we see that export growth in both owned brand as well as OEM.
Sumit Rathod
So both the categories are growing. OEM is also growing and our own brand sales is also growing. So what we have done in the overall, the freight prices remain to be higher, but now that’s a new normal and people have accepted it. But now again, it’s easing off. So that’s an advantage for us. So going-forward, even current quarter, it’s a back-to-school stock taking for them as well because for June, July, they will need the stock in this quarter for their back-to-school season. So Q4 is always good and Q3, Q4 is always good for exports.
Resha Mehta
Okay, sir, you are saying that export — the freight rates are no longer an issue because that’s been accepted as the new norm. But we’ve not seen any addition of new clients or new export clients, new OEMs or anything of that sort, right? I mean, that has not been a big contributor.
Sumit Rathod
Is this — that only our existing distributors and our OEM clients have increased
Alpesh Porwal
Through both of the existing distributions.
Resha Mehta
Understood, understood. And on the domestic side, right, so our domestic OEM revenues have been flat since you know at INR1213 crores in the last several quarters, right? And of course, you’ve highlighted that it’s the OEM specific issue and really nothing to do with us, right? But can we say that is there any growth possible from this INR12 crore INR13 crore revenue run-rate with that OEM is the worst behind for them.
Sumit Rathod
So going-forward, we have not even you know, we are concentrating on our own brands and in domestic market and we have not even taken into future projections have discounted the domestic OEM business.
Resha Mehta
Okay. So we expect this to remain a negligible part, right, and it will essentially be. Okay, got it. And on the domestic — lastly on the domestic owned brand, right? So if we were to just look at this particular quarter, while you highlighted that Q2 versus Q3 is a — I mean, if Q3 is a seasonally slow quarter. But even if I were to look at your Nine-Month domestic owned brand growth, right? And here a big part of your growth would also be the creative segment. So can you highlight for just for domestic owned brand pen segment, what is your Nine-Month revenue growth?
Sumit Rathod
So nine months revenue growth is at 4%.
Resha Mehta
This is for domestic owned brand pens, right?
Sumit Rathod
Yeah.
Resha Mehta
Understood. This is the value growth you’re talking about, right, not the volume growth.
Sumit Rathod
Value, value.
Resha Mehta
All right, perfect. Thanks so much and all the best.
Sumit Rathod
Thank you. Thank you.
Operator
Thank you. Next question comes from the line of Naitik with NV Alpha Fund. Please go-ahead.
Naitik Mutha
Hi, sir. Thanks for giving an opportunity. Sir, my first question is, if you could give us some sense on what sort of arrangement we have with in terms of any investments that we have to make and in terms of you know the margins or commissions, we will be making one the distribution that we do for them.
Sumit Rathod
So MAPED arrangement is more of a distribution network. So we are expecting it to penetrate and like mentioned earlier, this is into the premium category in the creative segment. So that will create a — and enlarge our complete portfolio of creative for the domestic segment. Currently, which for the premium and certain products much premium where current our brands are not available for our products in our own brand. This is where the category will cover-up from the overall market perspective.
Naitik Mutha
Is that? And sir, we would be — the margins I assume would be much lower since it is just distribution business.
Sumit Rathod
So margin, we try to maintain historically also on the similar levels. Of course, as it’s a combination in the beginning, it might be a little subdued, but overall, as you know, these products are more in the mid-premium and the premium as a category. So along with time, these margins will average out in the overall strategy.
Naitik Mutha
Got it. And my next question is on the creative segment. Now we aspire to do 15% to 20% of minimum growth in this segment, but for last three to four quarters, we have been sort of in the INR40 crores to INR45 crores sort of range. So I mean what — what levers do we have for increasing this growth to 20%.
Sumit Rathod
So as you know, there are multiple leverage we are going to — which are going to contribute for this particular growth. As we mentioned, the in-house manufacturing, which is going to increase in various categories, including our investment like mentioned in the Flomax, which is going to contribute more towards the in-house manufacturing of all different categories of pencils.
Also, MAPED will also be a contributor for the overall segment. And of course, in creative, as we are going along and as we mentioned earlier, we have already started investing in the in-house manufacturing and there are certain key products like the newly mechanical pencil, you know certain products in the creative range, these are the categories which will drive the future growth.
Naitik Mutha
So sir, in terms of distribution, if I were to compare the pen segment with the creative segment, so what percentage of pen segment distribution is already penetrated by us in the creative segment.
Sumit Rathod
So when we talk about the penetration of PEN versus creator, creator is present at 68,000 outlets. Currently, we are penetrating at 68,000 outlets and 10 is a 30,000 outlets. So — but in creative, we are focusing more to increase the throughput through these 68,000 outlets in initial phase?
Naitik Mutha
Right, right. Got it, sir. And in terms of your steel bottle segment, sir, I wanted to ask the INR12 crores of revenue that we did for the quarter, how much of this would be from B2B or private table or entire INR12 crores is in our own ramp.
Sumit Rathod
So I think it’s mostly 90% of it is in our own brand.
Naitik Mutha
Okay. Got it. And sir, lastly, in terms of exports, what — what sort of you know guidance we have, we can grow exports in double-d say on Y-o-Y basis for the full-year, not for the next quarter, but on a yearly sort of number, can we grow it in double-digits?
Sumit Rathod
Can we grow exports in the balance? So yes, from next year-on, of course, we are targeting to growth in double-digits. But looking at the current year and subdued first — in the second-quarter, Q3 was very, very positive and Q4 also looks promising. So coming off as a yearly top-line, we would be at a similar level in exports in the current year.
Naitik Mutha
All right. Got it, sir. Thanks. That’s all from my side. Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Nichani with ThinkWise Wealth Manager LLP. Please go-ahead.
Ananya Nichani
Yeah, thanks for the opportunity. I had a question on the houseware segment. So I’ve seen on your website that you have quite a comprehensive product portfolio under this category like casseroles and steel different boxes and all also. So can you just shed some light on that if it’s completely you’re manufacturing it in-house or how is the nature of the business? Thank you.
Sumit Rathod
So the household traffic category that you’re talking about, almost 90% plus percent is all in-house manufacturing. And this is just to — this category is overall to support the industry from the steel segment penetration in the domestic market. And as Mohit mentioned earlier, we are concentrating more towards penetrating the GT sales in the domestic market and this particular portfolio helps penetrate that market okay.
Ananya Nichani
So are you doing any manufacturing efforts for this because I mean, we’re barely hearing about it. So what is the
Sumit Rathod
Manufacturing in-house, these products?
Ananya Nichani
No, so are you making any marketing efforts for that? Because we’re not seeing any kind of…
Sumit Rathod
We are doing marketing, but the concentration overall from the marketing angle is more towards the steel bottle.
Ananya Nichani
But yes, we have been doing marketing comparatively subdued as compared to the steel bottles. Okay. Okay. And for creators, in your Q4 presentation, you had guided 28%, 50% type of CAGR. So are you still online for that for this year or are you revising it downward
Alpesh Porwal
Can you just repeat the question, please?
Ananya Nichani
So in your Q4 presentation, investor presentation, you had guided 28% 30% growth rate for the Creative segment, but this year so-far, we’re not seeing that kind of growth come in. So for FY ’25, do you still expect that kind of trajectory to continue or would you be revising the guidance downward?
Alpesh Porwal
So maybe you’re right, we don’t — the numbers don’t say that we are going to kind of achieve those numbers of 28% and 30% this year.
Sumit Rathod
But current year, we will be at 20% growth by the year end.
Alpesh Porwal
There’s a new product offering on the pencils
Ananya Nichani
20% growth for FY ’25.
Vimalchand Jugraj Rathod
Vehicle pencils and all that we have now introduced, this will actually go to you know increasing growth rate?
Ananya Nichani
Okay. Okay. Thank you. I just had one last question on employee cost. I understand that it’s going to be increasing from now on, but can you just give some light on when it will peak and what other standardized levels may take?
Alpesh Porwal
So on the on the employee cost, we did — we did invest. You see our higher employee cost quarter-on-quarter in whatever periods we are comparing. This is basically to build the entire strength of the company for sales and distribution and administration and even in manufacturing. So the numbers, the teams are set-up and that’s where you see a higher employee cost. Obviously, the first-quarter you would have seen the first and the second-quarter on the wages front also, what contributes to our higher employee cost is a rise in the minimum wages. So that has also contributed. But as we go-forward, we are going to — we have to start a consolidation — consolidating. And in fact the ROI, if I would put in that terms, the ROI on the investment in employees has started paying-off. So that will go also to add-on or make — help us in the operating leverage going-forward?
Ananya Nichani
Okay. Okay. Thank you so much.
Operator
Thank you. Next question comes from the line of Shradha Kapadia with Share India. Please go-ahead. MS. Kapadia, please go-ahead with your question hello Kapadia, if your line is muted, please unmute yourself and go-ahead with your question.
Shraddha Kapadia
Hello, hello, am I audible?
Vimalchand Jugraj Rathod
Yeah. Yeah.
Shraddha Kapadia
Yeah. So actually I’m just taking the previous participants question further. So if you could provide us the bit of detail on the launch of mechanical pencil, how it fits into the company’s broader product strategy? Also what edge is holding in this category? And since the launch, what has been the response for launching this new mechanical pencils and what is our edge over the competitors, which we have for this product?
Sumit Rathod
So basically, you know, as expected, the response is very, very positive. And we haven’t launched in all-India. We have launched only in few states because we are also ramping-up the capacity — production capacity, which will take about another two months. But whatever we are manufacturing on monthly basis, we are liquidating that and we are — the response has been very, very positive.
Ananya Nichani
Okay. Thank you so much. That was the question from my hand.
Operator
Thank you thank you. Next question comes from the line of Aradna Jain with B&K Securities. Please go-ahead.
Aradhana Jain
Hi, thank you again. Just on the previous participant’s question on mechanical pencils, I understand that we’ve launched 10 category mechanical pencils, right? So just wanted to understand that are there no other companies which are manufacturing or selling at that price point? And secondly, you do have other mechanical pencils as well, right, in maybe a higher range.
If you could just throw some light on how has the performance overall on your mechanical pencils beam of the other price points that you have and what sort of traction are you expecting from this going-forward? And what sort of differentiation? Like I couldn’t understand on the differentiation part. I do understand that you’re at the INR10 price point, but is that the only differentiation or is there something else as well?
Secondly on the PEM segment, we — in the last quarter, we said that we’ve again refocused our attention on the rupee IN segment. So — and we had launched a few pens in that segment which was to rollout across India eventually. So where are we on that and sort of traction are we seeing in that segment?
Sumit Rathod
Yeah. So talking about mechanical pencils, currently, we are the largest mechanical pencil manufacturer in India. And you know, the capacity we are increasing on yearly year-on-year basis. And there is a — there is a difference between the regular mechanical pencil and the mechanical pencil we just launched, which is a 2 MM mechanical pencil, which is a, you can say a kind of substitute to a wooden pencil which looks and feel like wooden pencil, but it is a mechanical pencil, two MM mechanical pencil. So the — we were — in the earlier question, you were talking about that only that the response has been very, very positive and you know that has helped us even penetrate our regular 0.5 and 0.7 mechanical pencils.
So overall, the overall category is in a growing stage for us. That is one. The number two, the second question was about 5G pen. So we have launched in a few states in India. And again, you know, we would be doing that by the end of this quarter, we would be launching in pan-India. So the response has been very, very positive. And so going-forward, this will help us penetrate further in INR5 rupees as well.
Aradhana Jain
All right. That was helpful. Thank you.
Operator
Thank you. Next question comes from the line of Risha Mehta with Green Edge Wealth. Please go-ahead.
Resha Mehta
Yeah. Thanks for the follow-up. Just one question. Working capital, so I think we’ve always been talking about making some small improvements. So have there been any improvements that have happened? And if yes, what are those? And how much more can we reduce?
Alpesh Porwal
As far as working capital is concerned, you’re right, we have been working on this. We are aware of the high rates which we have been having on working capital cycle. That is basically the stock, which we see normally. See, there are two reasons out here for a higher working capital. One, we say is due to the Chinese New Year closure, which has come in January, we had to keep extra stock in December. In the previous year, the Chinese New Year was in February and hence, we had stocked up in January in the previous year.
The second reason is we have also added 55 new products and few of them are the first-in the category. So there is — there are two things which we are looking. It’s just a matter of time when they stabilize in the market and that will have a direct impact on two things. One is the stock that we have to maintain and also the credit period we are giving to — to penetrate the market. So given these two of contributors to a higher working capital like you pointed out, we are aware of this, but the new policies which we are kind of bringing in and new measures, which will go to reduce the working capital. So you will see the impact in this quarter when you look at the 31st March quarter or we will see the very positive impact here.
Resha Mehta
Right. So okay. So on the inventory days, I think we will probably be at around 84, 85-odd days that we’ve been at. I understand maybe not much improvement possible there. But on the debtor side, you said we’ve put in some credit policies, etc. So where could that number — I mean, what could that number reduce to by how many days would we be able to reduce?
Alpesh Porwal
No, if we see — Mr Shah, what we see out here is as we add products as a category, within the category, we can add so many products out here. But the first-of-its-kind, I’ll give you a small example of the two MM mechanical pension or there is — it’s a first-in the category. It’s a market to explore for us. When we push our product, the first of its kindly push the product in the market. Once we get the traction in that product, that’s when the credit period also starts going down.
I’m just an example of how this works in the industry. And the stocking of the working or stocking of the goods is where we have multiple SKUs. When we come into multiple SKUs and new products being launched, there’s always in anticipation of sales and having the product ready for supply, we have to kind of keep those products in-stock. So these two reasons are the main where we see the higher working cap. Rationalization continues. It continues. The rationalization continues, right.
Resha Mehta
Got it. Got it. All right. Thank you so much. All the best.
Alpesh Porwal
Thanks, Risha.
Operator
Thank you. Next question comes from the line of Sahil Vora with MNS Associates. Please go-ahead.
Sahil Vora
Hi, good afternoon. Thank you for the opportunity. I had a couple of questions on the distribution front. Could you provide an update on the current distribution reach for steel bottles? Last quarter, you had mentioned you had hired 25 odd new distributors. What does that count stand as of now today? Also, have we targeted any new modern retailers?
Sumit Rathod
So-so yes, we have done a little more penetration in the GT market and compared to earlier, now we have currently standing at 50 distributors. And when you talk about the modern retail and e-com, of course, it’s a continuous process and we are adding more-and-more partners in this channel. And going-forward, we are working on a couple of more very significant players in the industry.
Sahil Vora
Okay. And on the creative front, just a second. What is what is the count on the creative front and if I can recall the earlier count was somewhere around 65,000 to 70,000 distributors, roughly translating to 20% of your existing network. What’s the updated count, if you could provide that as well?
Sumit Rathod
So creative retail touchpoint is more or less in the similar lines, which — but what we are concentrating now as a policy is increasing the throughput and the shelf-space in these particular retail outlets. And this is where our concentration of the current strategy implies to.
Sahil Vora
Okay, understood. And my next question is regarding the PEN business. Your pen business has decreased Q-o-Q, while on the other hand, the second-half is always better for us historically. As I was of the hoping that back-to-school segment picks up demand from students and education institutes. However, our creative stationery and steel bottle business have extributed growth. Did the festive shopping help this segment while reducing demands for pens? And can you walk me through how the consumer demand was shaping up during this quarter?
Sumit Rathod
So if you talk about Q3, like you mentioned, this is more of a season thing. So because of the festivities during this quarter. That’s the reason the concentration of individual buyers shifts a little bit from the pen segment more towards the household and that’s why you see the category jump. Also, of course, because the — in the Q4, going-forward, as you know, it’s always been one of the strongest and you will see a significant increase in the Q4 in terms of all three categories.
Sahil Vora
Okay. So do we feel there is no headroom for growth in terms of revenue per pen segment. Is the competitive intensity from like-new players putting pressure on our overall market-share?
Alpesh Porwal
No. No, we don’t see that thing happening out here. And as you would understand that the competition was always there earlier also. What we are trying to say explain to you is that the 3rd-quarter for us has always been on the lower side and we see the uptake again in the 4th-quarter. And historically, we have seen these numbers. In the school exams yeah.
Sahil Vora
Okay, all right. Thanks a lot. That’s it from my side and all the very best.
Alpesh Porwal
Thank you very much.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Vimalchand Jugraj Rathod
Thank you everyone for taking some time-out to participate in this call. In case of any queries, reach-out to our Investor Relations or advisor, Orient Capital. We wish you all the best and hope to interact with you soon. Thank you so much.
Operator
Thank you. On behalf of Orient Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.