Control Print Limited (522295) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Control Print Limited Q3 FY '20 Earnings Conference call, hosted by Asian Markets Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bhatelia from Asian Markets Securities. Thank you, and over to you, sir.

Very good afternoon. I welcome you on behalf of Asian Markets Securities to the conference call of Control Print Limited. On the call, we have with us Mr. Shiva Kabra, Joint Managing Director; Mr. Rahul Khettry, CFO. So Rahul, I would now invite you to speak a brief on the company, the business and the performance for the quarter and 9 months FY '20. And post that, we should open the floor for questions and answers. Over to you, Rahul.

Welcome everyone to the third quarter con call of Control Print. We appreciate your taking out some of your busy schedules to attend the call. Mr. Shiva Kabra, Joint Managing Director, joining me on this call.

Hello.

Let us start with a brief on Control Print followed by the specific analysis on the financials of the current quarter and end with a Q&A session. For those who are probably reviewing the company for the first time, the detailed presentation has already been put up on our website as well as in the investor presentation for this call, wherein we have given a hyperlink for the company overview. Control Print is in the niche coding and marking segment. This is an oligopolistic market with 4 major players, 3 of whom are MNCs and Control Print is only make-in-India manufacturer. This gives us the advantage to sell our products locally and compete strongly with the other multinational players. We are the only integrated manufacturer of printers as well as consumables in India, giving us the advantage to share the benefit with our customer. This also gives the confidence to the customers for the long-term partnership with Control Print. We have our manufacturing facilities in Nalagarh, in the state of Himachal Pradesh, for the manufacturing of printers and the second plant in Guwahati, in the state of Assam, for the manufacturing of consumables. Both our manufacturing locations are state-of-the-art facilities to produce good quality products. All our consumables are manufactured in Guwahati plant. And in addition, we are also manufacturing some printers in that location. We have a strong sales and service team of over 350-plus engineers, which gives us the advantage to service our customers efficiently because predominantly, the after sales service is very critical to maintain the customer satisfaction. With 10 branches -- with 10 branch offices across North, South, East, West and Central India, it gives us the advantage to be in direct contact with all our customers through our own employees and build our relationship for repeat orders and continuous supply of materials. Service support for the printers has to be delivered in terms of AMC and CMC contracts as well as consumables, which our customers have to procure on a regular basis based on their production volumes. This gives us a continuous direct interaction with the customers, and we get to know the pulse of the market as well as the improvement that we need to make in terms of enhancing our services. We are having complete end-to-end accounting in our SAP ERP system, starting from the [ Pio ] processing to collections, followed by the integration of the CRM and other ancillary modules, which gives the confidence to the team as well as the customers. We have a wide customer -- spread of customer base, catering to multiple industries like pipes and cables, metals, automotive, food and beverages, FMCG, pharma, et cetera. And we continuously endeavor to customize our products to reach out to the other industries to increase our installed base. We have the entire range of products in our portfolio to meet the coding and marking requirements of the industry. The detail is elaborated in our company presentation. We are very confident that we have the best-in-class products to meet the requirements of most of the substrates, which give additional advantage to the customer to do business with Control Print. With a strong foundation and the 5 pillar that is man, machine, material, technology and finance, well-established to augment our business plan, we are ready for what is next. Now let me give you a brief analysis of the financials of quarter 3 and the 9 months of this financial year. It has once again been a good quarter with a strong performance, which is in sync with our business plan and strategy, and we hope to continue this trend. We are confident that the performance of 9 months will be witnessed in the fourth quarter also, and similar growth trajectory will finish the year on a high note. We have delivered growth in multiple dimensions that is in our revenue, in the operational profit in the EBITDA impact, along with volume growth in printers and consumables. We witnessed a year-on-year growth in revenue of 7.9% for the quarter and 15.6% for the 9 months. The operational profit for the quarter was affected due to high employee benefit due to increment disbursement in quarter 3, but the operational profit delivered a strong growth of 20.5% for the 9-month period. The EBITDA grew at 7.3% for the quarter and 21.7% for the 9 months. The PAT grew at 69.6% for the quarter and 17.3% for the 9 months. So as you can see that all the ratios are a very strong performance. The reason for growth in revenue was due to volume growth for printers as well as consumables, which is a positive sign for increase in momentum of industrial production. The Flagship division continues to inject -- continue to grow as per expectations, mainly backed by normalized industrial production of some of the industries where we have a stronghold. The margins are healthy, with operational profits at 20.9% and EBITDA at 25.8% for the 9 months. The main driver for the margins are good revenue growth and stringent cost controls. The increased installed base will drive the business in the coming quarters. Our product launches of CIJ printer, the high-res printer and DTO printer continue to grow exponentially, and we are confident of our potential in the coming quarters and years. With dedicated national level managers driving these verticals, with focus on specific sectors, we hope to cement our leadership position in these applications. We have realigned our sales team to specialize in these segments, which will give these new products the desired impetus. We have also assigned separate managers to focus on OEM sales and key account -- customer accounts. And the strategy is showing encouraging results and should yield good quantum of business. Our LCP business reported a decline, but we are changing our focus to noncement business. And the team is confident to open up new sectors and generate business in the coming months. The company has strong free cash flows, and the trend is expected to continue. Fundamentally, the company remains strong, and we are continuing to work on our planned strategy as we are confident of the growth potential to deliver positive results. We would like to end the -- we would like to end on a proud note that Control Print has entered the list of top 1,000 companies on the stock exchange by market capitalization. That was a brief of the financial results. And now we are open to the Q&A session.

[Operator Instructions] The first question is from the line of Mr. Karan Bhatelia from Asian Markets Securities.

Sir, can you throw some light on the revenue mix across our categories for this quarter compared to Y-o-Y and for 9 months?

For the quarter, the printers is at 21%, the consumables roughly at about 58% and spare and service at about 21%. And for the last year, '18, '19, it was 20% on printers, 59% on consumables and 21% on sales and service.

So this is for 3Q FY '19.

Which one?

The number that you recently shared was the comparable number for last year...

For the full year.

Same quarter?

It was for the full year of '18, '19. It will be quite similar in the quarter also.

Okay. And in terms of volume growth for printers?

So we've had good volume growth of about 14% on the printers and about 25 -- close to 25% on the consumables for the quarter. This is more on the -- most of the -- the main consumers that we sell on the inkjet printers. It doesn't include the LCP consumers, focused more on the futuristic business.

Karan, do you have any follow-up questions?

What's the sales volume for printers, in terms of absolute numbers?

Sorry, could you repeat that?

What's the absolute printer volumes for this quarter and for 9 months FY '20.

We've done more than 600 printers in the current quarter. And in 9 months, it's about 1,700, 1,800 printers.

So we've crossed the 11,000 installed base.

We're quite close to crossing it.

The next question is from the line of [ Divesh Mehta ] from [indiscernible] Wealth.

Yes, Rahul, I just wanted to understand one thing that the CIJ printers, which contributes a major part of our sales, what was the growth registered over there for last quarter and overall for 9-month business?

So on CIJ, for 9 months, we have grown at about 15%, which is a strong -- which is what we anticipated and that's what delivering results. First 2 quarters were definitely stronger. This quarter, we have grown at about a little close to 10%. But overall, in 9 months, it is about 15%.

And still, the pipe manufacturers are the major customers in that segment, right?

Yes, the pipe and the cable manufacturers, even steel...

It is so widespread, we don't need to serve the entire sector, manufacturing industry like paints and food companies. Food is one of the biggest things, FMCG, personal care. So we do not see it -- pipes are definitely one of our bigger sectors, but we sell to every segment. All manufacturing companies, and steel is also a big sector for us and many others also.

And Shiva, what would be our market share as on date compared to Domino's and the rest of the competitors?

I don't have the Domino's latest figures.

It was -- in last quarter, I think it was around 35% for Domino's.

Yes. So for Domino's, I don't think would change that much, but our estimation of the market size is somewhere in the region of INR 1,260 crore. So Domino is about -- I think, Domino is ranged about INR 350 crore and [indiscernible] respectively, [indiscernible] will be about INR 230 crore, we would be there. So we're talking about roughly [indiscernible] the market between the [indiscernible] about something like INR 1,100 crore. And maybe the unorganized market would be another 20%, 25% on top [indiscernible]. The whole market is somewhere between -- anywhere between INR 1,250 crore to INR 1,400 crore, of which the 4 major players about between INR 1,050 crores to INR 1,100 crore. Yes, something like that. So the market share between the 4 of us, still, we're moving bit faster than our competitors. In the last -- last year, we were slow, but this year, we are definitely doing better than them. So I would say, from whatever I know is that they're not -- they're growing in low single digits -- I mean, in mid-single digits, as we described.

And Shiva, still we are earning the same GP margins for consumables, which was around 80%?

Our consumable margins are quite unchanged, largely. I don't think it's much different. So overall, is we don't really increase the prices much either we had a cost increase too much. Maybe slight cost increase, which the volume increases, would have taken care of.

But here, the margins are...

The margins are very constant at this stage. It can go up or down a couple of percent quarter-on-quarter. But over the years, it's quite stable. So again, we are a small company. So you can't take the quarter-to-quarter margin numbers to -- maybe take a look over a year -- on annual figures what I'd say.

Okay. And Shiva, I think we met last time around Jan, Feb last year. So during that time, you were quite optimistic about the new employee force, which was coming into the marketing side also and in terms of our sales team also, that is after sales service. So how is that performance is going around because we have spended a lot on the employee side?

So to be honest, like if you look at what's happened over the last year and a bit. And what happened last year, especially was that when we were INR 143 crore company, or something like that about 2 years ago, about cement itself was something like INR 35 crore of our revenue, right, INR 32 crores or INR 35 crores. It's like 20%-plus of our business. Now cement is somewhere 8% of our business. So that's where we've had a huge hit, actually, because the cement business has gone down tremendously. And recently, it's gone down because we've reduced the number of characters they are printing. So they're not preprinting some text, like the year and everything else rather than printing with our printers. So I think if I look broadly, that's gone down, but the CIJ and definitely, the other products have still kept us going from INR 140 crore, whatever we were to -- hopefully, we did INR 200 crore plus this year. So the other products are still growing strongly, but definitely that cement thing has sort of pulled down our numbers. Now I think going forward, as the cement is just a small part of our business, and there's not that much to go down, I'm expecting that it should be better going forward. But there's no doubt that the CIJ has grown reasonably. I think the CIJ, we are growing in a 10% to 15% range. That's a good number. But in the other products is where we expect the growth to be much faster, we're talking of like high double digits. And I think that is sort of what we are getting right now. I don't know offhand what the numbers are, what is it exactly? So we have -- I would say that yes, maybe like 40%, 50% year-on-year compared to last year. So that's way the other products are growing. So if you take out the aspect of the cement business, I think, and then if you look at our business, it's not been a bad growth over the last year.

We have lost share from the cement industry, which is the industry which has been performing well for us for last 20 years in terms of revenue mix.

Again, you're a bit soft here. Can you repeat that again, you're a little bit soft out here?

Yes, sure. I'm saying when we have lost some share on the cement industry side. And I remember that 6 months back, it was at around 11%, 12% of our sales, which has come down to 8% now. So now which are the other industry, which has regained that share of sales?

That was broad-based, there's no specific industry. So we -- I would say like the big sectors for us are pipes, cable and wires, steel, personal care. But again, you're getting like what I'm saying, this -- we still do business in paints, and that's growing. We still do business in beverages, that's growing. We still do business in pharmaceutics, and that's in -- pharmaceutical and dairy are 2 bright spots for us. Dairy, we put as a subset of food in our broad industry categorization. So I think automotive has slightly declined also. And definitely, cement has been affected. But all other verticals are growing. So it's quite broad-based, no specific one sector which I'd say is a out contributor. Cable and wire's been a little bit slow, which is not declining, it's growing bit slow but then all the other sectors are growing faster for us. So I would say, especially pharmaceutical, dairy, pipes would be like probably the 3 more faster-growing areas for us. And in general, we have good gains across industries.

One last question, Shiva, the RFID chips, which were installed 2, 3 years back in all the printers of our clients. Now they must be started yielding results for us, right?

Yes, yes, they are. Although we would be getting very easy growth, but we already suffered in some other products, right? So -- yes.

For last 2 years, it's ...

I think we started sometime in -- towards the end of 2016. So it's almost 3 years now, that number right?

It's a very stable product now and no hiccup from that.

And all the customers also accepted that the tag, the RFID chip is a feature of our printer. So in the beginning, maybe there was a little bit of hesitation with the salespeople, with the customers because we had a model without the chip, we had a model with the chip. So obviously, everyone wanted the model without the chip. But now I think it's accepted. I'm not saying, happily accepted, but it's accepted.

[Operator Instructions] Next question is from the line of [indiscernible] from [ CEO Capital ].

Shiv, there are a few questions on the balance sheet. Our working capital continues to deteriorate. It's almost -- it's over 180 days now. So any commentary on that side? What can we expect for the next 2 years? Would this stay here or improve or deteriorate? Why is that movement happening? Every quarter, we have lost like 10 days. So any commentary on that? Second. On the CapEx, what's your outlook for the next 2 years? What are the capacity utilizations? And where would you -- I believe Guwahati is still -- must be close to 50% or 60% capacity utilization. But any commentary on that side? And finally, this IP issue, the court case. Any updates there? And what is our maximum liability? If we lose the case, what is the big -- like maximum downside we see? And again, your commentary on that?

Yes. So I'll go with the second question first regarding the CapEx and the capacity. So in Guwahati, I don't foresee us needing any CapEx for the next 2 to 3 years. We've done a little bit of just INR 0.5 crore or INR 1 crore or something. We are seeing like no major, nothing in Nalagarh or Guwahati -- Nalagarh, we're spending about INR 2 crores, INR 3 crores. Maybe we spent like INR 4 crore in the last -- between the last and this year. But there's no major capital expenditure. This is just more to streamline everything and do it. And our capacity utilization in Guwahati is a bit under 50%. So I think it should not be a big issue going forward. Maybe if you'd make a new range of inks, maybe we invest -- INR 2 crores, INR 3 crores we might have to invest because that's sort of more specialized equipment. But other than that, I don't see any big capital expenditure. Our main CapEx that we would consider going forward is in terms of technology, acquisition, not in our physical facilities. I answered the CapEx question. The second question that I'm going to answer is your question on the court case decision. So we have the court case [Audio Gap] but the calculation of the judge itself, it was incorrect. But more than that, we are dissatisfied with the results. So what happened was we had a counter claim and this [Audio Gap] interest. Our calculation, even if we take the judge or we -- our own thing is going to be INR 4 crore. And another something like INR 20 lac or INR 25 lac of interest for every year that this drags on in case we lose or an appeal is not taken forward. But yes, I mean, we are still very confident that we have a case the other way around. So I don't want to comment too much on that because it's going to be [ subjudice ]. But I think the liability that there's not significant in terms of our billings. It's what I would say. It's not a significant amount even if it's a worst-case scenario. But we are still very confident of our legal position. Let me be very specific about that. Then the working capital question -- I mean, is that covers that both these questions? For the third question of working capital, I'll leave it with Rahul to answer that.

Yes. [Audio Gap] for that would not be a good estimate to use INR 4 crores to INR 5 crore as CapEx for next year. [Technical Difficulty]

[Operator Instructions]

So I'll answer the question on the working capital. So basically, the -- on the receivable front, I think that's okay because of increased sales, the number of days is well within our control. On the inventory side, some new products have been introduced. And since we were entering the quarter 4 and considering that there's some holidays in Europe and some parts are required, so there was a slight buildup on the inventory side. But I'm told by the plants that in the quarter 4, by March, we should be able to bring it down again. So not much to worry. We are working on it. And with the increased sales, I think the working capital days will further come down.

Great. So just to repeat, the CapEx part I missed is INR 4 crores to INR 5 crore is a decent assumption for next year?

Yes, it's reasonable. There will be some debottleneck on capacity or something that we might need and maintenance CapEx. So INR 4 crores to INR 5 crores is quite reasonable.

Next question is from the line of Dhavan Shah from ICICI Securities Limited.

So basically, I just wanted to understand about the volume growth you mentioned somewhere around 25-odd percent for the consumables and the printer volume growth is around 14-odd percent for this quarter. So roughly, the blended volume growth comes around 17-odd percent and the top line grew by around 8-odd percent. So is there any price decline?

So as I said that the main volume growth that we like to track is on our main inkjet products. There are other things -- other printers also involved. And as Mr. Shiva had also mentioned that cement business has been affected. So that's much more broad-based and might not be as realistic if we take everything into the [ PT ]. So we try to be a little more specific on our main flagship product is what I mentioned.

So out of the 600-plus printers, would it be possible to break it up among different printers and the different industries?

We generally don't give that breakup because competitive information is also not available. So it's not fair that we should publish our detailed breakup. So we give you more broad-based on so that you can be clear that product base is increasing.

But on roughly -- if I ask about the installed base of 12,000-odd printers, so can you segregate among the different industries? Which are the top industries contributing to this installation?

Unfortunately, we are not sharing the -- we don't share the industry-wise breakup of the printers and details of that. But we just mentioned that what industries we are focusing on.

So you are saying that the pharma, pipes and I think these 2, 3 -- 2 industries are contributing highest, right? Maybe I want to know.

As Shiva said a couple of times that we are across all the major industries. These are some of the ones where we do have a better presence, but you can -- the installed base is across all the different industries and sectors, cannot pinpoint on a particular industry. We've also continuously maintained that -- being -- we don't have a dependency on any single industry for more than 10% apart from 1 or 2. So that way, we are quite well leveraged.

Okay. So where...

The customers, we are not dependent more than 5% for a single customer. So that way, we are quite widespread and the customer base is quite large. And not more than 2%, 3% growth in new customers is what we're considering.

So going forward, how do you see -- I mean, which industries do you see can contribute highest to the -- to our top line? And in terms of the margin as well, if you can share -- I mean, is there any room for any improvement because I think consumers are growing, but still, our margins are somewhere at the same level?

No, we expect that...

I think for us, like I said, the cement was a bit of a negative factor for our growth in the last couple of years. Now that is just used as a percentage, can't affect us too much. But we're still confident of our overall growth. And -- I mean, I'm very confident we should be able to maintain the pace for the next [Audio Gap] Other things that our product lineup of -- all the other products besides LCP is very strong. We should [Audio Gap] before. We have a very strong growth in all -- across other products and we also have wide government industries. We are very confident that we are going to have a strong growth going forward, not strong but this is consistent growth. As I mentioned I think that's what's more important, consistent [Audio Gap]

So like the GDP growth, should we assume the same growth like whatsoever the GDP will be?

I think that we -- what have been doing this year, I think we should be able to do sustain it for the next 2 years in the -- so I think we have a better product line up than our competitors right now. We would refresh that line up. I think the advantage will be, therefore, for at least a couple of years. So -- and the growth that we see is going to come more in a non-InkJet printer business. Because InkJet -- like I say, they're still growing at a good 10% to 15% a year. But I think other product line of ours should see bigger growth. And get to the numbers posted by someone like Domino, which is #1 in our business. They are almost double our size at about...

And you also launched some 2, 3 printers, if I'm not wrong, in the last quarter. So how do you see the traction in those new printers?

I mean, if we've launched new versions of our existing printers in the last -- in this year, and this is [ financially ], not specifically in the last quarter. But in this calendar, if we've done it. And we did well. So I think it is the technology -- sometimes what happens when you come out with a product, you come out with something, some features are missing which you don't tell in your market analysis. And then it puts a bottleneck in your sales. Then you add those features, sometimes what happens is it has some bugs in practical installation -- and reliability is very critical in our business. So you just take some time to streamline everything. And now that's all very streamlined [indiscernible] very smoothly. And that's a big positive for us. And there was another question in terms of margins. And also, I think... Yes, okay. So margins, like I don't possibly track it so much from quarter-to-quarter when everything looks well from surface level.

Well I've mentioned in my opening remarks that the margins have already -- 9 months are quite sustainable levels. So yes, operating profit's at 20.9% and EBITDA at 25.8% for 9 months.

[Operator Instructions] Next question is from the line of [ S. Kapoor ] from [ Kapoor & Company ].

Sir, the first point was, sir, as Mr. Shiva was explaining about the court matter. So if things crystallize against us, the total liability was worked out to be, sir, how much? I missed that figure.

So he did mention around INR 4 crores. But again, since this is [ subjudice ], let's just wait for the things to play out. As of now, we are very confident that the things can be reversed.

And when is the matter listed? When is the next date, expected?

No, it's not -- it's still under appeal. So that's what the lawyer will let us know.

Okay. And sir point #8, also if you could dwell more on it, the note #8. About the warranty part, sir, where they have the reversed the provision and accreted an amount of INR 1 crores?

So that's note #7, not 8. That's note #7, that during the quarter. So we reassessed our liability for warranty. And we found that the warranty cost was lower. So -- and the provision that we have been making with the auditors over the period of time has just kept increasing. So we thought that it's not as -- we reassessed the liability and found that over INR 1.17 crore could be reversed from this. So in this quarter, we have done that correction.

Then this is done. Meaning no more further...

See, see, see. So it's a warranty cost, which keeps -- it's good that the company is bearing a lower cost. And if going forward, it is... Yes, yes, we keep a little bit buffer. So going forward, if we find that it's little -- again, we can have a look at it. But as of now, we feel this is more realistic. And -- but it's good that the company is able to save some amount of the warranty cost. It adds to our profit, obviously.

Sir, if I come to the -- Mr. Shiva's comment about the Guwahati plant operating at 50% utilization levels. So any comment on it? So why at these levels? And what are the permanent -- what will change going forward? Are we going to be there in -- at 50% only there?

So this was our -- because it was a plant that was set up about 3 years back, we had made a provision for a higher capacity because consumables is something that our business is going to continuously need. And with increased installed base, we are well covered for the next 2 to 3 years. So it was a strategic investment because you invest once in the plant. So it's not that the capacity is low. It is just that the use -- the market -- we are able to cover the full market requirement. And we are -- for the next 3 years, at least 2 to 3 years, we should be okay with this capacity.

So by 2 to 3 years, this utilization levels are going to go up as our -- the base is going to increase?

Correct, correct, correct.

Right, sir. Sir, coming to the update on the subsidiary part also, sir. If Mr. Shiva could explain -- dwell some more on the Liberty Chemicals part. And now I think it's more than a decade that we have made investment in that real estate property at Liberty Chemicals. So what is the end game currently for it? I mean, how long is the management going to wait and what is the thought process behind it?

So I'm not personally looking into that too much. Unfortunately, Mr. Kabra's not on the call. But there's not really any much movement, to be honest, one way or the other. There's no negative news. There's no positive news. There's nothing. It's status quo, we just maintain it as it is.

Sir -- Rahul, sir, you were talking about an increment for the employees in this quarter. So as a percentage of sales, sir, and what should we look at the employee cost? Going forward, on a ballpark basis, as a percentage of turnover, what should we be penciling in for this year and the next year?

Firstly, that's already there in our return. It's around close to 20% is what it is as of this quarter.

So this is what we -- what should be annualized, sir?

Yes, I guess. This is how it's been for the last few years. So I think that's a more realistic figure. Well I just mentioned that because the increment was paid out in quarter 3, that is why this quarter's results could be a little lopsided compared to the other quarter. But additionally, we have been at about 20% of our turnover on the employee benefit.

[Operator Instructions] The next question is from the line of [ Divesh Mehta ] from the [indiscernible] Private limited.

Rahul, I have one more question.

Sir, sorry to cut you off. You're not audible. May I request you to speak a little louder?

Yes. Rahul, I had one more question related to working capital?

Yes?

So as on date, what is our DC limit? And how much do we utilize it?

So we haven't utilized anything of our DC limit. As you know, we already have funds available in liquid fund, so no need to use our DC limit. So it's...

That funds, which are there in the liquid funds, they were the therapy proceeds, right? Which we did in 2018.

Well, directly or indirectly, yes. It's been there for -- since we have done the QIP. So it's been increasing. It's not that it's only QIP, it's the -- even the profits that the company is making over -- post-QIP is being passed in liquid fund.

[Foreign Language] And just one more thing I needed, a sales composition in terms of both industrial side also and FMCG and packaging side. If you can help me out with that figure?

No. I think we have maintained that we are strong on industrial. So we are still seeing that industrial is 50% and packaging and FMCG is about 40%. It could be 1% or 2% up and down, but roughly...

That is the main concentration, right?

Industrial, yes.

Next question is from the line of [ S. Kapoor ] from [ Kapoor & Company ].

Yes, yes, sir. Sir, I was just drilling on the point on technological disruptions also, sir, for -- in our industry, our Internet of things and all can assess the way things work today. What are the near-term's problem that we can face in -- this in the technology-driven segment altogether?

So contrary, it affects us in one way, but definitely, as the Internet of Things progresses, it is a feature that we have to incorporate in our future printers, so we can control them better remotely. And obviously, the idea for the customer in the future environment would be that if the printer has an error or a fault or the ink is low, we get the alert out here, and then we call up the customer and we say, "Hey, you need to do this maintenance procedure. You need to change the filter here". So we are doing that manually. We track it. We have our own preventive schedule for our printers and all. But then we have a live reporting of all the printer perimeters and theoretically, you will have one control unit where you can see everything. So there is that thing, but honestly, right now, we have not worked on it. It is something that I think will have a benefit. It'll be a feature that we integrate into all printers, starting from about 3 to 4 years from now. But right now, it's there. And the other thing is you also need the connectivity from the customers. For most customers, in their own factories, they do not give a connectivity for security leases for the data to go outside of their factories. So that's also something we'll have to work through. Because even right now, we have that -- lot of those facilities which are available through the Internet of Things, we have available through our LAN connection, which is available on all our printers, but no customer actually connects the LAN. So even the wireless LAN to our printer and then gives us the feedback of the data. So -- yes, we can correctly do remote diagnostics, we can control things remotely. It could be beneficial at one point of time, yes.

Sir, and what is the update of our treasury books? And how much our M&A -- how much money is still invested in the stock market operations, sir?

So it's roughly similar to what was there in released in the last quarter, not much of a change there.

What is the value, sir? I don't have it right now. Do you have the same figure?

So we'll have to check the last quarter. Definitely, it is -- it would have increased by -- because mark-to-market, this time seems to be better. And we have had some gains there. So that would have increased by about roughly INR 2 crores to INR 3 crores because of the mark-to-market.

Correct, sir. Sir, on this point of the court matters, sir, I'm just reading this line, if we could have a better understanding. I quote from your note, this says that, "the arbitration proceeding between the company and Videojet has -- Videojet, the arbitral terminal, has given an award in favor of Videojet, to pay a sum of INR 6.33 crores. With interest at 12% from the date of filing of statement of claim, that is 4th August, 2012. Further, the company has been awarded to receive INR 1 crores from the date of filing of the set of date of 9th January, 2013, with the interest of 12%, still the payment from Videojet". Sir, what is the order trying to say? If you could just dwell on what the statement is all about.

So I think if you read the order, it's very clear what our statement is saying and what the judge has passed as an order. What is your point being?

Sir, I'm trying to understand that it is INR 6 crores and INR 1 crores. That is total INR 7 crores that is to be paid in -- at 12% interest with Videojet?

It says INR 6 crores, and 1 crores they would have to pay us or something. So it would be about net INR 5 crores. And then there's an interest. But what I said is that there's a calculation mistake. You can [indiscernible] our counter claimer apart. And our filing date was in 2007, it is at the same time as their claim. So both things set off of with each other. So that interest component decreases across the period of time. And therefore, even if -- in our built-for reasons and all, we are very confident for success. Like I said, I don't want to get back into this question again. But even if we don't -- according to us, even if the judge's thing is accepted and their claim is accepted, without us winning anything, if the calculation is done correctly, in our appeal court also, the liabilities will be in the region of INR 4 crores, give or take a little bit here or there. Including all the interest from 2007 till -- as of 2019, as of the date of the appeal. So that is our calculation, one we have submitted. But we are still confident about case, again, like I said, I don't want to get into something -- we do not believe we have to pay anything. In fact we believe we have to receive, and we are the [indiscernible], but I'm not going beyond this.

Right. Sir, lastly on the cement portfolio, you did dwell much about it -- about the character's part. So what is currently the take on it? And how can we improve the business from the cement industry as of today, depending upon the character part? Do we see -- as the base has now been lowered from what it was earlier, so going forward, are we expecting more business in terms of whatever characters are yet to be pre-eminent as required to printer?

So to be honest, before, people are printing between 13 to 18 characters or even 23 characters a batch, depending on the customers. For us, it's mostly printing 13 and 17 characters. Now what's happening is that they were supposed to print the percentage of fly ash or something on the back, if I remember correctly. And now a lot -- something that was in the preprinting that information. The number of characters have come down by about 6 characters. Because the average rate of printing, which is 13 to 17 characters of printing between 7 to 11 or 13. And then many companies, like even big companies like C-Cements and all, were in that 7 characters for printing the whole date, even the year and other things we are preprinting, we only do that to certain of the dates. I mean the DD and MM. So people have tried steps as to reduce this thing. Now it depends on how things are enforced. Obviously the fly ash percentage changes a little bit from here to there. So we can't do preprinting stock. It depends on how difficult it is enforced, because I cannot say anything off hand. But I'm not expecting any major rebounds because neither cement's consumption growing at any massive rate as per my understanding, all though it's not a bad market. But we will hit obviously with the reduction in number of characters. And like I said, itself previously we were affected by low-cost pilots. And our policy is very clear. So where ever the business was not working out economically for us, we have withdrawn from both businesses. And so we have just taken the...

Yes, like I had also mentioned earlier, so we are changing our strategy to look at other sectors, which can use the same printer that cement industry has been using. So we'll continue to stick around in the cement, but at our own better rates, not competing with full year market players and focus on our team's attention on the other industry.

One very small -- just to answer -- I'm going to let -- sugar also form a part of the portfolio?

Yes, sugar also, we are supplying to the sugar industry also.

Correct, sir. Then exceptional item, please explain in detail, if possible. I mean, the Q3.

Exceptional items, we already mentioned in our note #5, right? Yes, that's mostly exceptional item of 179.36 is mark-to-market for the quarter.

[Operator Instructions] Next question is from the line of [ Dheraj Dhave ] from [indiscernible] Financial.

Just a first question, we said in innovation remark that we have around 350 engineers, which are looking at after sales service across our customer. So what is our total employee strength, say, on December 31?

There are about 750 -- close to 750 employees. Our plant engineers and head office. And yes.

So 350 would be plant engineers? Sorry.

So 350 million would be field staff I mentioned, which include sales and service engineers. Then we have people working in the factories. We have people in the branch offices as we have 10 branch offices across the country and the head office. So altogether it's about 750, close to that.

And secondly, just one observation. I've been observing the company for like 3, 4 years and then pending money trails, will come out with this exceptional item. It's maybe because of exchange rate, et cetera, et cetera. So basically, over a period of time, you have reduced exceptional items. So just trying to see if management can look into it and -- we were kind of same as on year, basically, what way you will get? Because over the period of times, it becomes difficult to visit company's finances. So just one of them. And last part, how much we provided for this Videojet arbitration. Have we provided anything in our accounts based on this?

So you see the point #6, it clearly mentioned in the last line, because we are -- as Mr. Shiva mentioned, we are very confident on our credentials to win the case. So accordingly, no provision for any liability on this account is considered necessary by the management. Point #6, last line.

Next question is from the line of [ Manish Shah ], an individual investor.

First of all, congratulations on such a great number in such a sluggish economy. My question was more related to the general market share gain from the unorganized sector. Plus, if the economy grows by 6% to 6.5%, what kind of a growth in our company in the top line can we achieve?

Sorry, could -- I didn't understand the question. Could you explain better?

Sir, what kind of a market share gain is from our company in the -- from the another right player, plus what kind of growth can the top line of the company at -- in the next 2, 3 years, if the economy grows by 6% to 6.5%?

Okay. So I'm not sure on the organized sector part of it. But I think that we've consistently maintained that considering the way we are positioned right now, we should have a strong double-digit growth for the next few years. So let's hope anything between 15% to 20% is what we always look forward to. Lesser than that is disappointing for our kind of business.

On the top line?

Yes, that's what I'm saying. The top line at about 15% to 20%.

Next question is from the line of Jayesh Gandhi from Harshad H. Gandhi Securities.

Since 2017, '18, we did QIP of closer to INR 30 crores. And as far as my understanding goes, we have used that money, INR 13 crores, INR 14 crore rupees, for short-term borrowing reduction. So how about the rest of the money? Have we used it in working capital or any CapExes?

So those are -- the QIB Fund was -- a little higher amount was used to reduce our short-term borrowings at that point of time. And the balance amount has been kept in liquid funds. And it has been growing consistently even with -- as the company is making profits over the last 2 years since the QIP has been done. So the liquid fund portfolio is continuously increasing.

Okay. And another thing...

If there is any capital requirement because of increase of revenues that is being internally funded.

Okay. And one more thing. Actually, I have recently started tracking your company. So I'm not very much aware of the industry. So is it possible that in this kind of an industry, heavy or a big CapEx can change the dynamic? I mean, if you do have bigger Capex, are you -- can you be into a new league or it's not like that?

No, it's not so CapEx-driven industry. It's more of a technology-driven industry. But people are already -- it's a bit like making trains or something. So there's not that much. It's also not a very fast-moving technology, it's not like genetics or something like that. This is like -- I can say, like a medical device or something like that, where people are at a certain steady state. And there is an improvement from generation to generation, but it's incremental movements, it's optimization. It's not a derivation that we've -- technologies that we are changing with our existing [ presence ].

And from the earlier caller. Can, you help you out with any market share number if you have?

Already, it was explained by Mr. Shiva Kabra in the previous thing. Maybe in the transcript, it would be more...

Yes, we just went through that, I think, previously...

Wait for the transcript and you can check it out there.

Next question is from the line of [ Som Subaravanj ], an individual investor.

Sir, what is the effective year-end tax rate for this year?

So the tax rate that was reduced by the government in the previous quarter, it was also done for MSME sector. And our tax rate now is down from 18% to 15%, which after surcharge goes to about to 17.5%.

The 17.5% is the total effective tax rate, right, for the year-end?

After surcharge.

Okay. So we also -- basically, what I see is you already used to pay less than 25% effective tax rate, even in the previous year. So I was wondering where actually you get any further debt redemption you get from this tax then?

So as you know, that our plant is there in Guwahati, under Section 18-IE, we have exemptions. So whatever we are paying is MAT, basically MAT taxes, what I explained, at 15% we are paying. So our Guwahati exemption makes us payback MAT tax. Whatever you're seeing now is also being accumulated in our tax return, which is a positive cash flow for us going forward.

Okay. And sir, the second question is, you put the mutual fund, whatever mark-to-market that extra gain with the profit and loss, I think that mix there of profit and loss in the earnings are quite fluctuating. It always comes as an extraordinary item. Why you put it in the profit and loss, and rather than in the balance sheet? Basically, that's my question. Because it makes it fairly fluctuating on what you're earnings looks like.

Part of the NDA -- as part of NDA. It is a requirement now to put the entry into the books of accounts. Earlier, it was only an information, which was to be given in the balance sheet, like you mentioned. But after NDA came into play, it has to be actually recorded into the P&L also. That is why we do it. However, to reduce the fluctuation, you'll notice that in the previous few quarters, we have been reflecting it as OCI in the other comprehensive income. So whatever, going forward, this will be moving from the exceptional item to OCI over a period of time.

Ladies and gentlemen, that was the last question for today. I will now hand the conference over to Mr. Karan Bhatelia, for closing comments.

Thanks, Shiva and Rahul, for the call. Thank you participants for being on the call.

Thank you, everyone, for joining in.

Thank you very much. On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.