Flair Writing IPO: Check out 10 key risks investors should consider before investing

Flair Writing IPO opened for subscription on Wednesday, November 22, and will close on Friday, November 24. Flair Writing IPO price band has been set in the range of ₹288 to ₹304 per equity share of face value of ₹5.

Flair Writing IPO comprises a fresh issue of shares of up to ₹292 crore and an offer for sale (OFS) of equity shares with face value of ₹2 each by a promoter and others aggregating up to ₹301 crore. Flair Writing IPO size is ₹593 crore.

"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!

The following uses of the net proceeds of the new issue include establishing the New Valsad Unit, a new writing instrument manufacturing facility in Gujarat's District Valsad; funding working capital needs for the company and its subsidiaries, Flair Writing Equipments Private Limited (FWEPL); financing capital expenditures for the company and its subsidiaries, FWEPL and Flair Cyrosil Industries Private Limited (FCIPL); funding the repayment or prepayment, in full or in part, of certain borrowings taken out by the company and its subsidiaries, FWEPL and FCIPL; and serving general corporate purposes.

Also Read: Flair Writing IPO: Here’s what GMP signals ahead of the issue opening

The company's promoters are Rajesh Khubilal Rathod, Mohit Khubilal Rathod, Sumit Rathod, Vimalchand Jugraj Rathod, and Khubilal Jugraj Rathod.

Here are some of the key risks listed by the company in its Red-Herring Prospectus (RHP):

• The company's operations, prospects, business, and financial results could all suffer materially if it is unable to carry out any further plans for capacity expansion.
• The success of the company depends on its capacity to adjust and respond to customer demands while preserving the best possible product mix in terms of production volumes and profitability in the volume-driven writing instrument market. The product demand may decline as a result of any incapacity to successfully implement the growth strategy, which could have an negative impact on the business's operations, prospects, and financial results.
• The company has not placed any orders for machinery worth ₹75.02 crore, which is roughly 100% of the total amount of machinery that will be bought with the net proceeds.
• A significant negative impact on the business, operations, prospects, or financial results could result from an increase in raw material costs or a shortage in supply from suppliers for a variety of reasons.
• The company's sales of goods under the "Flair," "Hauser," and "Pierre Cardin" brands account for a sizeable amount of its revenue; therefore, any damage to these brands' reputations could have a negative impact on the company's operations, cash flows, and overall financial situation.
• The company depends on its distribution network to sell its goods in India and other countries, so any disruption to this network could have a significant negative impact on their operations, business, prospects, or financial performance.
• Their business, prospects, operations, or financial results could be materially impacted by competition from both organised and unorganised players in the Indian writing and creative instruments market.
• Since the company depends on the import of raw materials, any delay, interruption, or reduction in the raw material supply from our suppliers due to a variety of factors, such as changes in trade policy, geopolitical unrest, or fluctuations in foreign exchange rates, could negatively impact the operations, cash flows, and financial situation.
• Any inability to secure sufficient working capital for their operations could have a negative impact on the company's operations, financial situation, cash flows, and business results.
• The company lacks a department specifically for research and development operations. The company's operations, business, and financial situation could suffer if it is unable to develop new products in a timely and cost-effective manner.

Also Read: Flair Writing Industries Limited IPO to open for subscription on November 22, sets price band at ₹288-304 apiece

Flair Writing Industries Limited IPO GMP today

Flair Writing IPO GMP today or grey market premium is +71. This indicates that Flair Writing share price today are trading at a premium of ₹71 in the grey market, according to investorgain.com.

Also Read: Fedfina IPO: Fedbank Financial Services raises ₹329.99 crore in pre-IPO placement

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Flair Writing share price was indicated at ₹375 apiece, which is 23.36% higher than the IPO price of ₹304.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Also Read: Flair Writing Industries files ₹745 crore IPO to fuel growth and dominate global market

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.