Santosh Rasiklal Raveshia, Managing Director, DOMS Industries

8 Dec 2023 , 05:16 PM

Run us through the business model of the company.

DOMS was established in 1973 by my father, Late Shri Rasikbhai Raveshia and Late Shri Mansukhlal Rajani. The company has evolved into a comprehensive entity engaged in the design, development, production, and sale of a diverse and high-quality range of stationery and art products. Operating across 28 states and union territories in India, we have expanded our footprint globally, exporting products to approximately 45 countries. Company has a broad and differentiated presence across various product categories and price points, positioning itself as the fastest-growing company in the stationary and art material sector in India in terms of revenue over the period of FY21 to FY23.

Our flagship brand, DOMS, serves as the cornerstone of our operations, complemented by sub-brands such as Amariz, dedicated to fine art, Fixyfix, catering to our adhesive range, and C3 which represents our non-wood pencil offerings. This strategic brand portfolio has played a pivotal role in our growth and market presence both domestically and internationally.

Why should a retail investor invest in your company vis-à-vis other listed peers?

DOMS distinguishes itself with its peer group through a remarkably diverse portfolio, positioning us as the least product-concentrated company in India today. While our pencil line contributes approximately 30% to our revenue, the remaining portion stems from our expansive range in scholastic stationary, and scholastic art products.

One of our key strengths lies in our constant innovation, with newness serving as a significant attraction for consumers across various segments. As a company, we take pride in our vertically integrated manufacturing infrastructure. This strategic approach ensures a fine balance between price engineering and the highest quality specifications in our product offerings. By maintaining this equilibrium, we strive to provide value to our customers while upholding our commitment to delivering top-notch products.

Could you elaborate on your approach to vertical integration, particularly concerning raw material procurement? How does this strategy contribute to your margins and influence pricing dynamics?

Given our extensive product portfolio we have varying raw material profiles across different categories. In our pencil production, the primary raw material is wooden slats used to manufacture leads, while plastic-based stationary items we rely largely on polymers. Paper, as expected, constitutes the primary raw material for our paper products. These raw materials are predominantly sourced domestically, with some imports, managed judiciously to control costs.

Having emerged as a key player and market leader, DOMS takes a strategic approach when faced with substantial increases in raw material costs. In response to such escalations, we implement adjustments by passing on the impact to our consumers. This is executed either through an increase in Maximum Retail Prices (MRPs) or by adjusting pricing within the distribution channel, depending on the specific impact. Historically, over the past couple of years, we have consistently increased the average selling prices of our products in response to significant cost escalations. 

Could you provide insights into your distribution model and your strategy with respect to modern and traditional channels of trade?

Since the establishment of DOMS Industries, our primary focus has been on establishing a well-organized distribution network. Currently, we have over 120 super stockist channel partners across 28 states and union territories in India, along with close to 4,000 distributors servicing approximately 120,000 retail outlets nationwide. It is worth noting that we also have a significant presence in modern retail, and our products are readily available on various e-commerce platforms. As our ticket sizes are relatively smaller, our participation in the general trade is more extensive and widespread, allowing us to reach a larger market.

What is your perspective on the anticipated growth in the next three to five years?

We firmly believe that our strategy, which involves expanding our manufacturing facilities alongside the enhancing our distribution network, will play a primary role in our future growth. As part of our existing expansion model, we are venturing into the writing instrument category, for which we have acquired 44 acres of land earlier this year. This land will be utilized to establish the necessary infrastructure for this specific category, and we anticipate substantial growth stemming from this new expansion.

Furthermore, we anticipate growth from good utilization of our existing plants and equipment. Our comprehensive approach encompasses both the establishment of new facilities and the optimization of our current resources to drive sustained and robust growth for the future.

Please elaborate on the significance of product innovation or the introduction of new products within your categories.

Since the inception of our journey, we have been mindful of infusing our products with enhanced value and multiple unique selling propositions (USPs).

For instance, in our sketch markers, we introduced an anti-push mechanism in the tips, providing an innovative edge. Another example is our Two Dooz pencil sharpener, designed for both left-handed and right-handed users.

Our range of products under the DOMS umbrella is brimming with ingenious ideas and USPs, catering to diverse needs of our customers. Introducing solutions that directly address consumer problems has proven to be well-received and widely accepted by customers. 

Please provide a summary of the company’s financial profile? What are the strengths, and also outline the long-term focus areas within your financial strategy?

Let us delve into our financial performance over the past three years. In FY21, we achieved a revenue of slightly over Rs. 400 Crore, followed by approximately Rs. 680 Crore in FY22, and a substantial increase to Rs. 1,211 Crore in FY23. The impact of COVID restrictions during FY21 and FY22 resulted in challenges, particularly with the closure of educational institutions. However, post 2022, as restrictions eased, there was a notable surge in demand, representing the pent-up demand from the previous two years. DOMS capitalized on this opportunity, leading to a remarkable 77% increase in revenue, reaching Rs. 2,211 Crore.

Although the situation has now normalized, our revenue for the current fiscal year, as of September 2023, stands at around Rs. 760 Crore. It is worth noting that our asset turnover, a crucial metric, reached 3x in FY23, with ongoing expansion projects and focused growth strategies we are confident of further improving our financial scorecard.

Help us understand the company’s strategy on Environmental, Social and Governance (ESG).

I would like to highlight that Fila, one of our corporate promoters is listed on the Milan Stock Exchange since 2015. They have a strong commitment to high governance standards. Since 2015, we have actively pursued initiatives in the areas of water harvesting, community betterment, and corporate social responsibility activities in the field of education, among others. As we move forward, we remain dedicated to upholding and enhancing our performance in the ESG domain.