Linc : Transcript of Analysts/Institutional Investor Meet/Con. Call

14th November 2022

The Listing Department,	The Manager	The Manager,
The Calcutta Stock	The Department of	The Listing Department,
Exchange Ltd.	Corporate Services,	National Stock Exchange of
7, Lyons Range,	BSE Limited, P. J.	India Limited, Exchange
Kolkata - 700001	Towers,	Plaza,
	Dalal Street,	Bandra Kurla Complex,
	Mumbai - 400001	Bandra (East), Mumbai -
		400051
Scrip Code- 022035	Script Code- 531241	Symbol- LINC

Dear Sir,

Sub: Post Earnings Call - Submission of Transcript

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing herewith the transcript of the Post Earnings (Conference) Call held on Thursday, 10th November, 2022 which is simultaneously uploaded on the website of the Company.

This is for your information and record.

Thanking You

Yours faithfully

For LINC LIMITED

KAUSHI K RAHA

Digitally signed by

KAUSHIK RAHA Date: 2022.11.14 10:06:40 +05'30'

KAUSHIK RAHA

Company Secretary

Encl: as above

____________________________________________________________________________________________________________

Linc Limited (formerly known as Linc Pen & Plastics Ltd.) A: Aurora Water Front, 18th Floor, GN 34/1, Sector-V, Salt Lake,

Kolkata- 700091, India. T: -9133-6826 2100 W: www.lincpen.com, CIN: L36991WB1994PLC065583, E: [e-mail]

"Linc Limited

Q2 FY 23 Earnings Conference Call"

November 10, 2022

MANAGEMENT: MR. DEEPAK JALAN - MANAGING DIRECTOR

MR. NK DUJARI - DIRECTOR FINANCE

MR. SANJEEV SANCHETI - UIRTUS ADVISORS LLP

MODERATOR: MR. NAVIN AGARWAL

HEAD - INSTITUTIONAL EQUITIES

SKP SECURITIES LIMITED

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Linc Limited

November 10, 2022

Moderator:Good afternoon, ladies and gentlemen. Welcome to the Linc Limited Q2 FY23 Earnings Conference Call. 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 management's opening remarks. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note, that this conference is being recorded.

I now hand the conference over to Mr. Navin Agarwal, Head Institutional Equities at SKP Securities Limited. Thank you, and over to you, sir.

Navin Agarwal:Good afternoon, ladies and gentlemen. It's my pleasure to welcome you to this earnings conference call on behalf of Linc Limited and SKP Securities. We have with us Mr. Deepak Jalan, Managing Director; Mr. NK Dujari, Director Finance; and Sanjeev Sancheti, Uirtus Advisors LLP; the IR advisors to the company. We will have the opening remarks from Mr. Deepak Jalan followed by a Q&A session. Thank you and over to you, Deepak ji.

Deepak Jalan:Thank you, Navin. Good afternoon and a very warm welcome to Linc Limited Q2 FY23 earnings conference call. I will take you through the business and operational highlights of the quarter gone by, while our CFO Mr. Dujari will share the financial metrics.

I'm pleased to share that Q2 FY23 has been a landmark quarter for us, as we have achieved the highest ever revenue and profits in the history of our company. While Pentonic sales continue to grow, Linc revenue also posted strong growth. Further, export revenue also experienced good growth on the back of higher volume and a stronger U.S. dollar.

Consequently, our operating revenue grew by over 35% year on year at INR 127 crore. With Pentonic continuing to grow and plans for introducing new products in the Pentonic table, we expect strong top line growth in the coming quarters as well. I'm happy to share that in line with our focus on brand building, we have launched the campaign for the new Pentonic B-RT ball pen which is being played at T-20 World Cup over Hotstar.

In the popular segment of Writing Instruments, more specifically the Pen segment, the company continues to have a strong presence with a market share of about 8%. Company's focus on INR 10 plus segment of the market since the launch of Pentonic brand has helped the company grow at a faster pace. One of the USPs of the product, is perceived value due to its unique design has gone a long way in establishing Pentonic as one of the strongest brands in its segment.

In our three years, Pentonic now contributes around 30% of company's core revenue as against less than 7% in FY19 when it was launched. Due to higher GPM of over 40% in Pentonic Series, the company's average GPM, which was below 22% in FY18 have steadily increased to 30.5% in Q2 FY23. Increase in selling price of our legacy product, strengthening of the U.S. dollar and the rationalization of polymer prices during the period resulted in this sharp increase in operating margin.

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Linc Limited

November 10, 2022

Export contribution increased to 22% as against 18.7% in the same quarter of the previous year. The Japanese Yen depreciated against rupee by around 7.5% which resulted into reduced procurement costs of Uni-Ball product which we distribute in India. Consequently, the gross margin improved from 25.4% in the first quarter of this year to 30.5% in the current year -- the current quarter.

Operating EBITDA margin also increased sharply to 12.3% in the quarter as compared to 8.2% in the first quarter of this year and 8.1% in the Q2 last quarter -- the last year. The price of key inputs which had peaked in the earlier quarter, have since rationalized are expected to remain stable in the coming quarters. This along with our continued focus on higher margin products, the Pentonic Series should help us in growing our profit in the coming quarters as well.

Linc 2.0 with the five-pronged strategy that we have embarked upon as was discussed in our previous call, we believe the company will not only grow rapidly over the next few years, but will also be able to expand its margin with judicious product mix and economies of scale. Let me reiterate the five-pronged strategies adopted by the company for your ready reference.

The first one, increase touch points. India has over 10 million nonstationary outlet likes of Kiranas, medical stores, Pan plus stores etcetera. And from nowhere in FY20 the company has reached to almost 1.4 lakh such outlets directly, thus, taking its total touch points to over 2.35 lakh outlets. The company expects to expand its overall reach to more than 5 lakh touch points by FY25.

The second is the focus on higher margin products. And as informed earlier too, our focus continues to be on the higher value and higher margin products. We will soon be launching pens at INR 20 and INR 40 under the Pentonic portfolio.

The third is the inroads into stationary products. Company's foray into the full range of stationary products through an exclusive tie up with Deli is progressing well and we expect to generate a minimum of INR 100 crore of revenue in 3 to 4 years' time. In fact, we have already done a top line of about INR 11.5 crore in the first half of the current year and are well on way to cross INR 30 crore top line in the current financial year.

The next one is the stepping up of the existing capacity and to meet that targeted demand, we are planning to increase our manufacturing capacity at Gujrat by putting up an additional manufacturing facility adjacent to our existing factory.

On the ESG front, the company has taken the following initiatives. Number one, substituting plastic wrappers with bulk packing and paper boxes. This initiative saved about 60 tonnes of plastic in FY22. The next is we employ more than 1200 female workers in our manufacturing facilities. We also employ and provide training to a small number of specially abled workforce. We also support several NGOs who provide education to the less privileged sections of the society.

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Linc Limited

November 10, 2022

The Company is also actively working on projects like recycling used pen. Consumers are encouraged to change the refill rather than buying a new pen under its refill more campaign. These efforts should go a long way in contributing towards reducing the carbon footprint of our planet.

Thank you. And now I would like to hand over the call to Mr. Dujari, our Director Finance to provide updates on financial numbers. Thank you once again.

NK Dujari:Thank you, Mr. Jalan. Good afternoon, ladies and gentlemen. Many thanks for joining the Q2 FY23 Linc Limited earnings con call. I will give a brief overview of the financial numbers for the quarter before we open for Q&A.

During Q2 FY23, the company's operating income grew by over 35% from INR 94 crore in Q2 FY22 to INR 127 crore. The company launched the Pentonic Series of pens in FY19. The significant higher margin profile of this series coupled with minimalistic contemporary looks resulted in top line and bottom line improvement since the launch, and the company achieved sales of INR 397 crore and operating profit margin of 24.7% in FY20.

Post FY20 COVID slowed down the momentum. However, with significant increase in Pentonic share in the portfolio, increase in selling price of its legacy products, rationalization of input prices and strengthening of U.S. dollar, the company achieved record revenue and profits in the current period, with operating profit margin costing 28% in the first half of FY23.

Q2 FY23 Profit After Tax stood at INR 9.6 crore up from INR 3.6 crore in the same quarter of the previous year. Q2 FY23 EPS stood at 6.43 versus 2.41 in the same period last year. Company continues to use its free cash flow judiciously, and in the process has been able to reduce its net debt significantly over the last 4 years. From a net debt of previous INR 62 crore in FY19 the company is now debt free, with free cash flow of our INR 8 crore as on 30th September 2022.

Company is extremely focused on using its resources judiciously and hence has embarked upon a modular expansion plan in Gujarat. While the basic infrastructure is being created to double its capacity to 20 lakh pen per day, some critical equipment and machinery will be added in modular fashion in sync with the demand needs. Well, the total cost of the project is expected to be around INR 50 crore, the first phase of the expansion which will increase the capacity by 5 lakh pens per day will cost only INR 35 crore and will be operational by Q4 FY24. The expansion will be largely funded by internal accruals.

On the back of expanded capacity, the company is revising it guidance upward to achieve top line of over INR 650 crore by FY25 with a CAGR of over 22%. During this period, the share of Pentonic revenue is expected to grow to over 32%, while Deli is expected to contribute over 10%. We expect to achieve annual operating EBITDA margin of around 14% by FY25. With low-cost modular expansion and judicious use of debt, we also expect ROE to cross 20% by FY25. We continue to remain focused on our long-term goal of sustainable growth, profitability and strong deleverage balance sheets.

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