Linc chases market share, not profits

Linc Pen & Plastics Ltd has announced that sales in the third quarter (Q3) ending December 31, 2005, inched up to Rs 32 crore while net profit declined to Rs 27 lakh against sales of Rs 31 crore and profit of Rs 1 crore in Q3 ending December 2004.

Sales rose to Rs 104.41 crore for the 9 months period ended December 31, 2005, but net profit declined to Rs 2.85 crore in the 9 months ended December 31, 2005.

Linc Pen & Plastics was the leading manufacturer of writing instruments in eastern India. Exports stood at Rs 17.07 crore as compared to Rs 10.73 crore during the corresponding period in the previous year.

Linc's advertising spend was Rs 3.96 crore as compared to Rs 1.72 crore only in the corresponding nine month in the previous year. This helped increase overall brand awareness.

Deepak Jalan, managing director, Linc Pen, said, "In the next 2"�3 years, the company's focus shall be mainly to increase market share rapidly at the cost of short term profits, as market share was the best means of sustaining future profits".

He added, "From this quarter, we initiated tight credit terms in the trade and better supply chain management, as a result of which we were able to bring down the inventory holding of our channel partners to more efficient levels.

Consequently, even though the sales from the company to the channel partners in the domestic market may not have shown any growth in the quarter, secondary sales had grown by 12 per cent in the quarter.

The industry growth rate was estimated at about 10 per cent.

Linc was developing the markets in southern and western regions where currently it had low penetration, and at the same time banking on 10 new products launched recently, Jalan added.

"Linc Pen is initiating aggressive retail strategy and has opened eight exclusive "Just Linc" retail outlets in the last 12 months across the country, and by the end of this fiscal, will have 10 outlets," he stated.