Control Print Limited (522295) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Control Print Limited Investor Call for Results Discussion of 4Q FY '23, hosted by Asian Market Securities Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, et cetera, whether expressed or implied. Participants are requested to exercise caution while referring to such statements and remarks. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bhatelia from Asian Market Securities Limited. Thank you, and over to you, sir.

Thanks, [ Robin ]. Ladies and gentlemen, good evening, and welcome all to the Control Print Limited Fourth Quarter and 12 Months FY '23 Earnings Conference Call, hosted by Asian Market Securities Private Limited. From the management side, we have with us Mr. Shiva Kabra, Joint Managing Director; and Jaideep Barve, CFO. Now I would like to hand over this call to Jaideep sir for his opening remarks. Post that, we shall open the floor for Q&A. Thanks. Over to you.

Yes. Hello, good evening. My name is Jaideep Barve, and I work as the Chief Financial Officer of Control Print Limited. Welcome, everybody, to the earnings call for the fourth quarter of the financial year 2022, '23 of Control Print Limited. We appreciate you've taken out time from your busy schedules to attend this one. Hope you and your loved ones are safe and healthy, and wish you all a happy financial new year. Mr. Shiva Kabra, the Joint Managing Director of Control Print Limited, also joins me on this call. The detailed presentation has been put up on our website as well as in the investor presentation before this call. So those who are probably reviewing the company for the first time, Control Print Limited was founded in 1991. It operates in the niche coding and marketing segment, which is an oligopolistic market with 4 major players, out of which 3 are MNCs and we, that is, Control Print Limited, is the only Make-in-India manufacturer. We have our manufacturing facilities in Nalagarh, which is in the State of Himachal Pradesh for the manufacturing of printers, and in Guwahati in the State of Assam for the manufacture of certain types of printers and the consumables. Both these manufacturing locations are state-of-the-art facilities, where we produce good quality products. We manufacture and supply a wide range of printers, such as the CIJ, TIJ, High-Resolution Printers, Thermal Transfer Overprinters, laser printers, et cetera. Apart from these printers, we also manufacture and supply consumables like inks, ribbons and cartridges. The industries that we serve are cables, wires, pipes, cement, sugar, dairy, FMCG, health care, steel and metals and plywood. We have a strong sales and service team of 350-plus personnel across our 10 plus branches across India. Our domestic business is served to 1,600 cities in India with over 2,500 pin codes in it. As of today, we have an installed base of over 17,500 -- 17,000 printers across the industries. This enables the sale of consumables across the life cycle of the printers. Post our printer sales, we believe there is a continuous demand for consumables over its life, which typically lasts for about 5 to 8 years depending on its operating conditions. Moreover, our company has a robust network to ensure we provide higher time and a good after-sale service, which eliminates customer concerns. We also have our end-to-end ERP system, which is SAP, which supports our financial, production, process, sales and the CRM. This ensures maximum transparency in accounting, sales and after sales as well as the total controls of the inventory management and of orders received processes. Our systems and processes give the necessary confidence to the teams, vendors, customers, bankers, auditors and the investors. We periodically conduct training programs to assure that all our employees remain proficient in operating and maintaining the machines. We constantly endeavor to customize our products to reach out to other industries to increase our installed base. With a strong foundation and 5 players like man, machine, material, technology and finance, we are well established to augment our business plan, which we feel we are [ continuously striving ] for better and better heights. Let me give you a brief analysis of the stand-alone financial statements of Control Print Limited for the financial year ended '22,'23. On the overall position, India has marked its position as one of the fastest-growing economies globally. This growth trajectory is expected to continue through 2023 also. Towards the end of 2022, the manufacturers had scaled the production, mainly on the rise of rising international, domestic demand for Indian products. This trend also was observed in the first quarter of '23 indicating a sustained improvement in the business environment. Coding and marking [ systems ] play a crucial role in the manufacturing supply chains of both industrial as well as consumer goods. According to certain industry reports, our industry in India is expected to witness substantial growth with a CAGR of 9.85%. Food, beverages, health care, electronics, chemicals, construction, automobile industries are expected to be the major growth drivers of the coding and marking market in India. On the [ opportunity ] side, we feel that there are certain government regulations, which require companies in the FMCG, food and the pharma sector to give more information to the consumables about the products, about the industry from where it is manufactured. We ourselves have also gone into certain global collaborations during the course of this year. In December 2022, we entered in a JV agreement with an Italian company called, V Shapes. This is engaged in the manufacture and sale of packaging machines. It is also famous for its eco-friendly single-dose sachets. In July 2022, we acquired a company in Netherlands called Markprint B.V. This company is a [ progress ] of high-speed printing and coding solutions, and it's well established in the European market. This is affecting the area of high-quality single pass printing for packaging and industrial applications. We believe that partnering and having a synergy with Markprint, we will be able to offer better solutions and diversified portfolio. On the revenue front, the operating revenues for this quarter was around INR [ 84 ] crores. The overall operating revenue for FY 2023 is INR 291 crores, which is an increase of 15% from the previous year's operating revenue of INR 254 crores. While our main product happened to be CIJ printer, it is happy to know that the non-CIJ printers also showed an increasing trend in sales in this year. We continue to expand our footprints in dairy, cements and [ packaging ] industries. We have also launched new products during the course of this year. On the expenses front, we can note that consumption, which is the cost of goods sold, it has remained steady, approximately about 40%. It's more or less in the line as compared to the previous financial years. However, we can definitely hope for improvement in [indiscernible] in the coming financial year with optimized buying strategies. Manufacturing operating costs are at a consistent rate of around 3% of sales. This is in line with the prior year. Our employee costs are around INR 50 crores, which we see a decline of 2.5% as compared to previous financial year, which is largely as a result of the increased sales in this current year. Depreciation is steady at 5% to 6%, and other expenses are in the range of 30% to 40% average as in the last two years. The Q4 EBITDA, PBT, PAT and EPS exception items grew by 10.9%, 13%, 18.2%, 18.2% year-on-year, respectively. Whilst we are proud of all these achievements, we always feel that there still exists a considerable scope of improvement, if we aim for better revenues, higher revenues and also enjoy the higher [ consumable sale ]. The way forward for us is high [ consumable sales ] with improved industry production, new launch products during the year, focused marketing plans. We have an inside sales team, which will be given targets. We'll focus on the key accounts, also try to put more focus on the installed base and [indiscernible] larger market share and also look at the European companies [indiscernible] we've done so as to achieve better sales and synergy in this year. The floor is now open for questions. Thank you so much.

[Operator Instructions] The first question is from the line of Gunjan Kabra from Niveshaay.

Sir, I have -- I'm actually comparatively new to the company. So I wanted to understand the business model, like what is the active printer base that we have today? And what's the number that we expected to reach in next 2 years?

I didn't get the first sentence, ma'am.

Sir, I am saying I am comparatively new to the company, and I wanted to understand what is the active printer base that we have today? And what's the number that we expect it to reach in the next 2 years?

See, we've got [indiscernible] about 17,000 printer base at the moment. And if you [indiscernible] every year will get your numbers.

Okay. Okay. Sir, how do you estimate the requirements of the consumable to the printer. Like if I wanted to understand that if you are selling one printer today, then what's the consumable that we can estimate in terms of our ink requirement from that printer that is coming? And if you are selling the printer, is it certain that [indiscernible] for the next 5 years to 6 years the consumables for the ink requirement for that printer is being -- will be catered by us and that sale is going to be there? So how could we estimate that ink requirement?

Okay. So the way we see it as -- if we sell a printer to customer and it operates in normal operating conditions because [indiscernible] and without any abnormal wastages, [indiscernible] printer for the next 5 to 8 years. So we can [indiscernible] the consumable business that we can get from that particular printer would be around 5 to 8 years.

5 to 8 years is fine, I mean the printers life would be around 5 to 8 years, but the...

Once you purchase our printer, so he has to necessarily buy the consumables from us.

Sir, that is correct. But if I'm talking about say if we order a printer -- how much ink, like how much worth of ink will be sold for one year on one printer is what I'm trying to understand. That metric I wanted to understand.

Well, let me tell you that like we are in oligopoly. And though we have the machine run rate or consumption for the inks, at this moment, it's a little bit confidential data because since the operate in oligopoly.

Okay. Okay. That's it. No, not an issue. And sir, how much like if you can bifurcate our revenue from how many -- like different sectors what is the contribution, like major sector is contributing how much revenue? And sector-wise also the usage of other consumption of ink changes with different sectors. So if you can tell me -- explain me that.

On an overall basis, our line of business is consumable centric. And then what we can do is that you can say, let's say, about 55% to 60% of our business comes from the sale of consumable and roughly about 15% to 20% comes from the sale of printers. We also have something called a service income, which is the annual maintenance contracts or comprehensive maintenance contracts what we do. So about 10% to 15% comes from that business. And from the sale of spares, what we do, that is about 8% to 10%. So that's a brief distribution of that entire business what we do.

Sir, I'm talking about -- I'm talking about sectors. I mean how much is FMCG, how much is pharma? How much is plywood, MDF? How much is these sectors contributing. I'm talking in terms of that.

We do not -- I mean, if you look at this, there's no major concentration of business sector wise, but we believe that pipes, food, dairy, these are the top 3 segments for us, and that contributes about 40% of the business for us. The others are [indiscernible] about 6% to 7% each.

Okay. Okay. Sir, what would be the total capacity of consumables?

Capacity as in?

In tons or...

60% usage of the capacity.

Sorry?

60%, 6-0.

So that's the utilization, right?

That is utilization.

You cannot tell me the total capacity -- how much capacity.

[indiscernible] share with you.

You cannot share. Okay. Okay, sir. Sir, so any metrics on which you can guide us that, okay, this is the number of printers sold like last year, if we sold around 3,000 printers, or this year, if you are selling then, how can we estimate that, okay, this is going to be the total consumable sales. If not directly if you want to tell, but anything like metrics that we can judge on or anything from that sort if you can explain.

We have year-on-year, let's say, about 10% growth in the number of printers what we sell each year, that we can do.

The next question is from the line of Darshil Jhaveri from Crown Capital.

Congratulations on a great set of numbers. Hope I am audible.

Yes, you are audible. You can go ahead.

Sir, I would just like to know that we've been growing at a pretty good rate, currently. So what would be our revenue targets for the upcoming year or maybe next 2 years? And are our margins stable at 25%?

So I will answer that question, if that's fine. But we don't give any projections or targets out. So I can't tell you anything. Obviously, we hope that we continue I think sustainable growth. I think as far as our margin goes, like you would have all probably seen the trend, of course, there might have been -- I don't know what happened in the COVID time or something [indiscernible], but it's been sort of consistent over an extended period of time. So we're pretty sure we can maintain that. In fact, on a bigger base, it's much easier to maintain the margins. But as far as the revenue, it's not possible for us to project that as of right now.

Sir, okay. So I would also like to know of our JV and the new acquisitions. So how have they been contributing to the business? Are they more margin accretive? Or how is the demand in Europe? So could you give some color on our acquisitions?

Yes. So as far as the acquisition goes, I think Jaideep's got the numbers. He will give you a better idea, but it's been consistent since last year, and they were about EUR 2 million-odd in turnover, if I'm correct, approximately, and some good profit contribution. So that was Markprint. So we are still working on integrating some more of the products between us. It's been a bit delayed, and we are actually just finding to see the first set or so of printers and now we're going to test them on certain applications here. So yes, so far, it's not been bad, but it's not been like the integration has frankly been a bit slower than expected on both sides because they've been busy with some stuff and our team was also busy with some other things. And as far as the joint venture goes, it's a little bit early. Just actually, we've activated everything now. And yes, it's not actually contributing to the bottom line or the top line at all, but it's looking active now. And now it should actually give us some numbers in the coming quarter, in this quarter, but we should start seeing some business being done.

Okay. Okay. Okay. So the JV might contribute...

I know like all of these types of things that we do, I understand the excitement that everyone has, like, normally, we were pretty longer-term planning horizon in a lot of these type of strategic activities. So it could -- looking at a 3 to 10 year type of thing [indiscernible].

Okay. Okay. Okay. That helps a lot. Thank you so much and all the best for the upcoming quarters.

The next question is from the line of Abhishek Agarwal from Naredi Investment.

Sir, my first question. Company will run by maintaining a cash balance of INR 50 crores, for which you have also met investment. This is a good thing. But why have you invested in direct equity? Why you don't -- why you did not go through mutual fund? And also, you are not an investment company, and it is not our job. So what is purpose, please tell us?

Jaideep, do you want me to answer or you're getting that?

Yes, sir, I got your question. We know we are not a financing company. But the reason why we are keeping them in the investment as of now is that we are always on the lookout for new acquisitions, and we would like to keep our funds ready. Whenever the acquisition happens to be a good one for us to invest and the legal due diligence and operation financial diligence is done properly, the target company is identified. So we get funds to invest in over there. So that's the reason why we have kept it in equity as of the moment.

I agree. But why are you having direct investment in equity?

Yes. This is Shiva Kabra. I will just say that -- what we've gone through this before. I think if someone takes up on our con calls in the past and just go through it. So I don't want to stop that. But I think we've announced clearly that normally we're keeping this current cash sort of liquid balance of about INR 50 crores. And beyond that, we would be redistributing the money unless there's some immediate acquisition or investment in line. So I think we've been reasonably clear with our policy, our distribution policy. I mean, of course, and there can be an endless amount of questions, as we discussed in the past, whether you should keep it in liquid formulation or FT, whether you should keep it in a mutual fund or this thing. We felt -- we looked at very closely as discussed. Mr. Kabra had also given this -- the Board had discussed this in the AGM, one of them. And this is in our own past history, we've on average done reasonably well. We're expecting that this money is going to be consistently available because we are generating cash. So even if we use it for something, we will rebuild that cash balance so there's no like direct pressure on requiring this money for some immediate things. And considering that we've gotten a reasonably better return, considering the dividends and investment and also, I will point out that the dividends we get through, we can redistribute tax free, I believe, [indiscernible] people explain it to you. But -- so we've done a calculation on that. We felt we were getting a reasonable risk related thing compared to this. But like I said, it's not like our main business. We've made that very clear. Once we get to a certain level, we will redistribute the remaining money either in whatever form the Board decides, whatever from the Board decides [indiscernible].

So in future, you also investment -- invest in direct equity continue [indiscernible].

No, I think that we discussed that at board level. Like I said in the past, we've had a certain -- when we evaluate in the past, we had a better return on that. And in the future, there's no reason why we will take a specific take on it. You'll see what we feel is best. I think the Board has given a clear direction, which we have communicated, which is that we will be -- if there's excess cash and there's no specific acquisition or investment that we are looking at, we will return that. I think that's what I can say. And that to me, covers almost all those.

Okay. And the second and last question, what is the CapEx plan for FY '24?

It's marginal. I think the depreciation normally covers the CapEx, so something like that. Did you get my answer? I said that the -- normally, there's not really much CapEx at all in our business. So the depreciation normally covers the capital investment, if any. So it's -- the net block should be about the same is what I'd say. Jaideep, anything you want to add out there?

No, it's clear answer, Shiva. No, nothing major is planned as of now, but then if it is there, the depreciation will cover it.

The next question is from the line of Naysar Parikh from Native Capital.

Shiva and Jaideep, congratulations. So my question -- a couple of questions. First is can you just talk about what were the printer sales in Q4 and the full year?

Jaideep?

Yes, we can. You're talking about just the Q4, Naysar? Are you just talking about Q4?

I was talking about Q4 and full year, both. If you can tell me the number of printers sold in Q4 and full year.

In Q4, we would have sold about approximately 950 printers and for the full year about 3,200 to 3,300 printers in the year.

Okay. And I mean, I know you won't give future guidance, but just as you're looking for this year and FY '24, how are you seeing the traction on this, especially in context of the competition? Because what we understand is competition also going very aggressively both in terms of the new technologies they are bringing in, people, they are hiring, et cetera. So what is the sense of competition? And how do you see the printer sales, say, from FY '24 just directionally if you can talk about that?

So I can't comment, but I mean the competitive intensity is the same as what it was in the past, like we've maintained before also that essentially the bigger customers in India, the ones who want to take the least amount of risk will go for either us or of course, we [indiscernible] in March. And we are competing pretty well with all 3 of them. And as far as -- so we don't see any major changes in competitive intensity, but of course, the first month has been -- I can only talk about April so far. So we obviously see how the rest of year pans out. But it's looking positive so far like the cases -- and I mean, it's looking in line with last year so far.

Okay. Got it. And in terms of the mix of printers between CIJ, TIJ, laser, can you give that for the year?

Well, Naysar, don't -- please don't ask us about the breakup. This is too proprietary of information. We have our numbers ready, but the breakup to CIJ and non-CIJ is a little bit confidential as of now.

Okay. Okay. And in terms of -- you did talk about your packaging JV. I just want to understand what is the modus operandi over there? Like, would you be -- is it a JV company will sell together? Or do you have like distribution rights in [indiscernible]? Or how does that work?

So essentially, what we -- they have is -- they make some packaging machines, which have some unique features to it. And the packaging material is also proprietary to the machine. You see things similar on the Tetra Pak type of a thing. The Tetra Pak sells the machine, and they also sell the Tetra Pak [ Briks ] on top of a selling machine, so that's something similar. And what we are doing is we will be manufacturing some part of the range of machines here, maybe not entire range, but some part of the range. And we also will be -- have already started working on manufacturing, the proprietary packaging material, the flexible packaging material out here. So we made one type. There's another type, which is fully recyclable and that's still a few months -- this takes time to make sure everything works perfectly. And that's the second thing we have to get done in place. And there is third one, which is compostable one, which is still like by far we have started working on that. So basically, we will make the materials out here, or rather we get it sourced for ourselves from some specific manufacturers, and then we sell it directly to the customers in India and other areas of operation, and we will also be making the machines ourselves in our factory in Nalagarh. So that's the scope of the JV, and this is covering India and a few neighboring countries.

And the economics, how is it -- do you have to pay certain royalty? Or is there a profit share of any?

No. No. I mean they have the equity in this company, right? So that's -- whatever, I don't know what they've take. Obviously, we make some profits, and we might have to reinvest it and all, but eventually, I'm assuming if there's enough surplus, you'll get -- that equity will be valuable and they can get dividends off it so on and so forth.

Right. And It is a 50:50 JV, right?

It's at 70:30. Right now, it's 90:10 because we're still waiting for some RBI permissions and some compliance. So right now, we own the company. We still have to get some clearances before we can issue the equity to them for 10%, and then they will take it up to 30%. This is the way it is. So they have to pay in and to take it up from 10% to 30%. So that's the -- it's a 70:30. Eventually, it will be 70:30. Right now, it's 100% with us because we still have to get some clearances.

And how big is this, like company in terms of their home market or something? Are they like just -- is this new technology just getting started? Or is that like -- is it a big thing in their home market or something like that?

It's pretty nascent.

Okay. Got it. And on track and trace, right, I think you were talking about that also, so are we able to get any of the products, like, finalized on that? And when can we see sales of that actually picking up?

We've had some sales recently, so it is picking up. And of course, because of the pharmaceutical industry requirements, the demands are increasing out there. So yes, we are getting some benefits of that. Yes, but it's in process. It's a ready product. It's a ready solution from our side. So anyone calls up, we have a solution ready.

Okay. And last and then maybe I'll come back in the line again. FY '25, your target was INR 400 crores, now with where you stand today and with all the JVs and everything that you have, how do you look at it? Is that something that you still achieve you go above beyond, any sense?

I mean we can't say anything. The Board had set out a INR 400 crores stand-alone target. So it's not [ relevant ] with other ventures that are there. So yes, so obviously, we have that target set to us. But I mean I do want to say that it was a Board's decisions that was put out in AGM to the shareholders. And obviously, then it's become a big thing. So yes, but obviously, that means there is an expectation from the Board and we are working towards that. Stand-alone number, so it's not anything to do with obviously. It's easy to buy a company of INR 50 crores and add to that target, but that's not -- it was a stand-alone Control Print number. So our target, I think distributed INR 292 crores or something, INR 291 crores, so that's the number we've to take it to INR 400 crores [indiscernible].

[Operator Instructions] The next question is from the line of Devanshu Sampat, an individual investor.

Jaideep sir, your voice is slightly muffled, so there is a request to adjust the mic accordingly. So Mr. Shiva, just a question for you, right? So -- can you tell me what's the cash and cash equivalents right now as of March end?

I couldn't hear you again. Can you repeat that, please?

I am saying the cash and cash equivalent currently?

Yes. Jaideep, do you have those numbers? But I think they're on the balance sheet right there. I think we are about INR 70 crores between cash, liquid investments, whatever, financial investment...

Okay. So around...

170 -- but the exact number was published. So if someone looks at the -- it will be there in cash, bank balances and investments, and all 3 of them are liquid.

Shiva, it's about INR 15.5 crores.

Yes, how much sir?

INR 15.5 crores.

Sorry, I think they are asking for [indiscernible] investment so it's like..

Total investment on excess cash on books basically is around INR 65 crores, INR 70 crores, if I am not mistaken, right?

Yes, which includes the investments, yes.

Okay. So 1 question. There was a call -- there was a comment that Mr. Shiva had made right. I believe we should have returned everything in excess of INR 50 crores that we should have maintained. And we've only paid out about INR 15 crores of dividend, which is -- if I look at the payout ratio, it's the lowest since 2016. So I'm a little bit confused because the payout should ideally move up, right, because we have more money than what we had sought to keep in this cash and cash equivalents and -- so is there any change from what Mr. Kabra mentioned earlier that we'll be returning all the money of this number? You mentioned that we'll be needing some funds for some acquisitions, but shouldn't that INR 50 crore amount be taken care of that? Or [indiscernible] whatever numbers above INR 50 crores is what will be acquisition? I mean little confused, so if you can just help clarify this?

So I will clarify that, again. What I did say was that the Board will segment the most tax-efficient manner possible. I do want to say that there is an expectation of a dividend that if you give ex, then it's there every year or so maybe there is views that maybe other methods might be more tax efficient or more suitable to the [indiscernible] cash.

Okay. So that's something that we can still expect some announcement from the company soon [ as a dividend ].

Yes. So if the trend continues, and I'm sure that it could be, that in the Q1, you could see.

I mean, yes, we are generating about anywhere around INR 45 crores to INR 55 crores of free cash, which will obviously be [ adding ] to the cash balance we have right now. So sure. Okay. I got the message. Wishing you all the very best.

The next question is from the line of Raj from Arjav Partners.

Am I audible?

Yes sir, you are audible. You can go ahead.

Yes. So what you said is the average life of printer is 5 years to 8 years, right? So how much is the amount of the total ink...

Excuse me, I think, that's slightly incorrect. It's only between 8 to 12 years. I think the number -- it can be 5 years, definitely in cement, steel and some other industries, printer life is about 5 to 6 years only. But on average, I'd say like in a food or dairy or [indiscernible] company, it would be between 8 to 12 years.

8 to 12 years. Okay. Understood. So in those 8 to 12 years' time, so how much is the amount of ink which you can sell it to your client on a roughly basis?

You will understand that different clients have a different rate of production and different amount...

No, no. I understand, but still Just on an average, just a very rough figure would be good.

Jaideep, you have got that number? I think it's there in the presentation of -- Jaideep?

We have the numbers, but Shiva, because we are the oligopoly, we don't share these numbers.

You don't share numbers. It's fine. Right. Other question is, what is the average amount of printer -- yes. So what is the average ticket size of a printer? Like average order size of 1 single printer.

Yes. So it goes from about a lakh to about INR 4.5 lakhs on average, like the stand-alone range of printers.

INR 1 lakh to INR 4 lakhs.

Yes, INR 1 lakh to INR 4.5 lakhs.

Understood. In this AMCs which you have, so can we expect a higher EBITDA on AMCs?

So our business is -- you can clearly break it up into 3 parts or rather 2 parts, like the sales of the print cost and what we call the installed base business, which is broken up in further 2 parts. One is the consumables part, and one is the service, spares and filters part. I think approximately -- what is it, I think 21% of our business, something 20%, 21%, something like that, 20% is aftermarket business. And definitely -- I mean, there's no secret that we've made to the -- almost all our margin is on the aftermarket business.

Sorry, I didn't get you.

I said there's no secret we have made that -- almost our entire gross margin is on the aftermarket business and not the...

Aftermarket is the highest one. All right.

Yes. So that's including the spares, services, filters, the consumables, fluids, ribbons and so on.

All right. One more thing, if I could squeeze in, that in this JV opportunity which you spoke about. So how big can that opportunity actually grow? And how much -- like how are investors supposed to look at that opportunity?

I mean right now, it's just on opportunities, until we don't make anything concrete out of it. It's not possible to comment, I think...

So can we expect in future calls you will be able to give some clarity on this?

Maybe towards the back end of this financial year, it will be much better.

I can understand it. All right. All right. And also, can we expect FY '24 growth rates to be similar to the historical rates, right? Because since you are not going to do any more expansions and all those things, the right...

So it's not possible to -- for us to know, like, I mean, I think this question was asked. So I mean we...

But you can always give qualitative answer to this one.

Yes. April has been good in the number of cases, it is active, it is not bad. It's in line with what's happened so far last year, but we don't know what's going to happen in the rest of the year or anything soon.

The next question is from the line of Karan Bhatelia from Asian Market Securities Limited.

Shiva, I think last year, most part of the year, we had supply side challenges. So how do you see the situation shaping as of now?

No, it's definitely improved. That's a positive. Still some [indiscernible] issues, for sure. But I'll say, like, yes, it's down like 80% the issue that's been resolved. So still some things we are having, but it's been resolved to a great extent. So that definitely helped us in the last few months, I think.

Right. And now the cost escalation, have you able to pass on whatever cost increase we had seen for last year till now? Or we're still negotiating with our customers for that?

No, we have started on the price increases. I think -- I mean, the majority would be true, but it might not be completely done. So it's still in process, but I would say that the majority of cost price increases have taken place in the last few months.

Right. Right. Right. And Jaideep sir, if you can help me out with the breakup of INR 291 crores being printers, spare, consumables, mask and others.

So if you can say -- if you want in pure percentage shares, I can only say that about 18% to 20% is in printers, about 57%, 58% is in consumables. Spares contributes about 8%, and the service income is about 15%. We also have a small portion of the mask business is over 2%. So that's the entire breakup you wanted.

The next question is from the line of Deepan Sankara Narayanan from TrustLine Investment Solutions.

So firstly, in the opening remarks, you mentioned that there is some increased regulation for FMCG and pharma sector to put more information on content production, [ pack size ], et cetera. So any deadlines mentioned for these sectors? When this could get implemented, which could be a driver -- key driver for our growth?

So if I cover that question. You might have seen that recently that you have to print like the price per gram or the price per 100 mL or something like that. So that's been a sudden thing, which then increased the amount of information to be printed. So in some cases where people were changing the [ pack ] size around, they have to use the printers to print this information. The second situation was regarding the pharmaceutical industry, where there were some regulations, where they had to print -- they had traced their product through the supply chain through QR codes in the full track and trace system, where we have supplied a bit, but that has been delayed by the government, the regulation has not been withdrawn. It was originally for this year, I believe in August, it has already been postponed. I don't know exact details when it has been postponed to, but the pharmaceutical industry is [ pretty strong ] probably, but it has been postponed, but it's not been withdrawn.

Okay. Okay. Okay. So secondly, so Q4, though there has been good improvement in gross margin, but EBITDA got impacted because of our sharp jump in other expenses, so what is the reason for that sharp jump? Any extraordinaries involved there?

So if you look at the other expenses as a percentage of the sales, we don't have much of an increase, but yes, we can look up to that particular segment as a necessary improvement in the coming year.

So this run rate will be continued?

Well, we can always look at cost optimizations, which we'll definitely have to, like, focus on the next year. So we'll have better margins in the next year in that.

The next question is from the line of Harsh Beria, an individual investor.

Congrats for the good set of results this year. In your presentation, I think on a slide, it was mentioned that the new products are being introduced for industrial and nonindustrial verticals. Can you talk a bit about these new products?

Yes. So these are some more specialized applications that -- where we fine tune our some of our existing products or rather employ some technologies for like some more specific types of applications, so more for [ steel marking ], more for certain things in the wood sector for the plywood sector. So this is when people want to do something beyond the standard. So what we're doing is between coding and markings, if you really look at this like batch numbers, state codes, expiry dates, MRPs and stuff. But then a lot of customers also rely on some branding. And of course, with the track and trace, footprint, QR codes and tracking their bar codes and tracking their material through supply chain. So on the branding front, of course, with a lot of customers, they're looking at a different option, which is to print or maybe multicolor or any one higher resolutions and they want better quality of codes and so on. So we've got some different products that we have been working on developing, but also like it's a very nascent stage of the sales part. But of course, it's something that -- because obviously, what happens if someone say spending, I'm just giving an idea of. So I'm saying INR 100 printing. So what I can do is I can -- would rely on volume growth or I can try to go back to the customer and offer him something better and maybe it's going to pay INR 200 for that also. So we work on both fronts. So this is -- the idea was to see if we can upsell also to some of the existing customers. So maybe they are willing to, I don't know, pay for more [ appropriate ].

Okay. So this is in line with what we have been doing, like building a software team to maybe track the supply chain and giving customized services to end customers. So this is kind of in line with that.

So that is part of our track and trace thing that we're developing, and we've actually had some more successes on that front in the recent past? Or like I said, also meaning more through the pharmaceutical industry requirements. So that, of course, has some different aspects that the software aspect that we are working on. And of course we combine the software and the hardware and also all the other things, so it's like a single point of contact for the customer, but this is -- I'm talking more on the printing side only like with the printers, but giving some more options to the customer, so where they feel their product stands out more in terms of the branding that we do.

Got it. Can you talk a little bit about your Sri Lankan operations, how it's doing right now?

Yes, Shiva, I'll answer this question. With the Sri Lankan operations, we have regrouped our team over there, and the sales are like not on a very high growth, but some sales are happening. And week on week, we are experiencing new sales, both in consumables as well as spare parts. And we intend to like review the situation again and try to employ new people both in the sales and the service and try to revive operations in a much more focused manner going ahead.

And my last question is on our inventory. It's commendable how well we have done on optimizing inventory in the past few years. What is the optimized inventory base for our business?

See inventory will obviously depend upon some timing difference also. If you look at the [indiscernible], a lot of purchases happened in the last 15 days of March '23 in this year, so as a result you find a substantial increase in inventory as compared to the previous year. Otherwise, it's still aligned with whatever the cost of goods sold we are having over the previous years.

So for reaching our target of INR 200 crores in stand-alone sales, can you do this with INR 70 crores to INR 80 crores of inventory.

Well, we are -- like what we do is that because of so many tensions, like the Taiwan, China tension or the Ukraine, Russia tension, so the global supply of key components like boards and circuits of vehicle or the chips, that was quite constrained. So from a risk mitigation point of view, we try to build up the stocks, so that we don't fall shortage of anything, and we keep on delivering our printers to our customers based on the orders.

The next question is from the line of Ashok Shah from LFC Securities.

I am very much thankful for excellent performance. Sir, in the presentation, we have stated that we are serving 2,500 pin codes. So how many pin codes to be pending to be served? And also, sir, already 17,000 printer, we have got pre-installed base. So can you throw some lights on how many printers of our competitor are in markets? And also, do we know same data about our competitor also, or they are not disclosing data or it's not available for us?

Well, we are -- like what we do is that because of the over tensions like the Taiwan, China tension or the Ukraine war Russia tensions. So the global supply of key components like boards and circuits [indiscernible] or the chips, that was quite contained. So from a risk mitigation point of view, we try to build up the stocks so that we don't have shortage of anything and we keep on delivering our printers to our customers based on the orders.

The next question is from the line of Ashok Shah from LFC Securities.

I am very much thankful for excellent performance. Sir, in the presentation, we have stated that we are serving 2,500 pin codes. So how many pin codes to be pending to be served? And also, sir, already 17,000 printer, we have got pre-installed base. So can you throw some light on how many printers of our competitor are in markets? And also, do we know same data about our competitor also or they are not disclosing data or it's not available for us.

See, our 3 [ competitors ] are closely held subsidiaries of the foreign counterparts. So the very little information is available to the public domain for them. So there are private [indiscernible] entities. So not much of information we can get about their operating statistics.

So is it fair to disclose so much data from our side because we may be facing some competition or the data to our competitors.

So this data what we share as you like not a confidential data, whatever we can [indiscernible] we are restricting.

Okay. Okay. Okay. And sir, during the quarter, how many new customers we acquired?

In terms of customer we can't say anything, but during the quarter, we would have sold the [ fresh goods ], we have sold 950-odd printers.

But any specific new company we have added 2 supply or something like that because a new customer is the most important because that could help us to grow in future substantially via new addition.

See, we have got blue chip clients or the customers who keep on giving businesses because they [indiscernible], But yes, to answer your question, we have made progress for new customers, and that is what I can tell you on this call in regard -- we can't disclose [indiscernible] to the customers volumes or the kind of volumes we are doing with them.

Okay. And sir, one suggestion last three AGMs were held virtually. So currently, new physical AGM is allowed. Please hold AGM physically if possible.

Okay. Thanks.

[Operator Instructions] The next question is from the line of Rajnish Bel an individual investor.

Consolations on a good set of numbers. So I have 2, 3 questions. One is like what is the current market size of the printers and how much is our market share? And second is on [indiscernible] told that you have kept some cash for the further acquisitions. So it will be on the printer side or it will be diversified to some other sector.

Shiva, would you like to take this question?

Yes, I'm going to answer this question. As far as the thing is we are in the coding and marking business and basically, that is a sort of subset of digital printing, we have [indiscernible] and one of the reasons of the Markprint acquisition is we want to get into some more higher-end applications in the coding and marketing space or it's beyond coding and marking. It's sort of undefined [ field ]. Yes, but you can see it's like a higher-end version of coding and marking and that's definitely diversification that's happening. And yes, we have spent on the acquisition to do it. And, of course, we're also [ beefing up ] our own internal development capabilities to meet up some of those applications. We have diversified in the packaging sector, where there's an overlap of our customers, and this is through the [ V Shapes ] joint venture. And we have diversified into the track and trace which is an integration of our printers all the way down into the software, and also, we are now working on fine-tuning it so that essentially what we were doing we were providing traceability to the customer. And now we're actually working on actually resolving customer issues, so which could mean inventory can roll to 3, 4, it could mean preventing of diversion of goods from one area to another area, it could mean dealer incentives or other types incentives or the type of incentives that are managed system and so on. So then, of course, to get in touch with the end customer under resolve the issues besides, of course, [indiscernible]. So there are diversifications, which are related to our core business but I wouldn't say like they're major diversifications. In the end, we are just selling more solutions to the same set of customers. But yes, there is -- it is a diversification. All 3 would be considered to be whether you're talking of the track and trace and providing the full solution. Whether you're talking of getting past coding and marking into like a more higher-end digital printing type of a solution or whether you're talking of the packaging industry, the specific V Shapes opportunity that we have started, all 3 of them are diversifications and strictly [indiscernible], but not exactly our current business.

Got it. And how big is the total market size? And what is our current market share for our current business? And how big is the market for coding and marking space?

Yes. So the [indiscernible], we are #4 in the industry. We think the gap between us and the #3 players now, we're still #4, but the gap between us and the #3 players are quite small at least on a stand-alone basis. We are just -- we're a little bit less than them, but not that much less. And yes, so the 4 of us, combined would be about INR 1,400 crores to INR 1,500 crores in sales -- no about INR 14 crores, INR 15 crores in sales, the 4 of us. The total market will be in the region of INR 1,900 crores -- it will be between INR 1,800 to INR 2,000 crores, somewhere there.

How about the coding and marking space market size now?

Yes. So that's why I said, the 4 of us combined about between about [ INR 14 crores and INR 50 crores ] is my rough estimate, give or take, like INR 50 crores plus/minus, and the entire market would be somewhere between INR 1,800 crores.

Understood. And coding and marking space because it's a high technology business and this operating margin will be higher than your current business? Or will be similar margins would be there?

I don't understand that question. Could you repeat that, please?

The operating margins for coding and marking space of business will be similar to your current business? Or will it be higher?

But we are in the coding and marking business.

Okay. And sir, another question is on the V Shape business. When do you think you will start to start the revenue for this business in this financial year or next financial year?

I'm expecting to have some revenues in our joint venture this year.

Okay. And in last con call, you said you are going to bring some technology from the Markprint to the Indian market. So what is the status on that? And how big market we can capture through Markprint business line because it's different from our current business line?

So that's a bit delayed. I had mentioned earlier, we've just about got our first set of printers from there. And now we will be running it at some customers and see lots of customization we need for the Indian market. Obviously, the cost needs to come down. So yes, frankly, it has been slow -- slower than what we promised and what we expected, but it's still moving from what we [indiscernible], but it has been much slower than what we all expected. The more teams on their side and our side, there's not that much extra manpower available or resources and bandwidth available to focus on every single thing to do. So yes, I'm hoping that the coordination is much better this year. And we at least have more for development phase this year and then start getting the benefits from the next financial year.

And last con call, you said you have been to invest some more money in Markprint. So what is the status have you already invested more money or you are yet to invest that money.

So they already have a [indiscernible] of cash with them in Markprint itself. We were looking at it to grow further, and that's something we need to discuss with them, but they do have financial resources themselves and also like surplus cash balance on their side. So yes, [indiscernible]. Jaideep, if you want to give some specific details.

Yes, Markprint actually works on a healthy operating margin. I mean the net profit margin was 15%. So they're good enough cash is at the moment to augmented operations. But in case -- I mean, whatever they need, I mean, they want to expand into European markets or the American market, we'll be obviously there to help them out in case the substantial thing coming out.

Okay. And the last question on the like you have surplus cash on books. Are you thinking for any buyback for the tax-efficient purpose?

Yes, we mentioned that the Board will be looking at different things in the near future. We've come above that INR 50 crore limit. We did do an acquisition, so we wanted to do that. Of course, in case there are other things [indiscernible] we'll talk about that also. So we -- I mean, obviously, like I said, some more decision on what to do. But if there is excess cash on the books and there's no capital investment or acquisition, we will return that.

Thank you very much for the detailed answer, and I wish you best of luck for this financial year.

Thank you so much.

We have the next question from the line of Pawan Kaul from Compound 26 Capital.

My question was around the fact that you mentioned that the industry is [indiscernible] industry. So how difficult or how easy is it for you to kind of source customers? And what is the decision-making process for a customer when they are procuring these printers?

So typically, the customers tend to stick to 1 or 2 suppliers that are established. And what happens is that if they have some new requirements which -- that's normally when they look at somebody else. Everyone occasionally has issues with their service and supplies, rather not their supplies, but their services and their printer performances. And at that point of time, if the customer experience is downtime, then they will look at changing. In general, the single most important decision-making factor for customers is the -- what the perceived reliability or the actual reliability of the product and the service. So what they want is they want the product, they want these printers to work, and they don't want that their line goes down at any cost because of our printers [indiscernible] market. So that's the single most important decision-making factor. And on a second note, yes, the market sort of -- or the customer sort of perceive the 4 of us as the 4 [indiscernible] available if they don't want to do experimentation.

Understood. And, a lot of these printers kind of off the shelf? Or are there a lot of customization built-in? Because you mentioned earlier that the price point is between 1 to 4 lakh for each printer. So would it be...

We have actually, there is a range of printers, so -- but they are the largely off the shelf, the inks change in case to case. But the way we install it on the line is what really changes from every customer to -- from [indiscernible] like I said, we have a range of printers and we have like 6 different lines of printers. And in that, we have like multiple printers or different models are different. So we have [indiscernible] of products. It's like you have air conditioning, you'll have like windows AC, split AC and [indiscernible] ACs and the [indiscernible] type ACs or whatever and you will [indiscernible]. So like depending on what the different people require, so I guess it's something like the similar situation here. We have a range, but yes, they're sort of standardized products and then the way we install it on the line, the inks that are there, again, somebody had even mentioned in the beginning about the ink capacity but we have like about 50 to 70 different types of inks that we sell. So there's no capacity. It's more about a technology barrier. And yes, there is a capacity, of course, but it's not difficult for us to increase capacity because we already have that set up and so running 8 hours a day, we can just run 10 hours a day. So the -- when it will create the ink, qualify the ink on our printer to make sure it runs reliably to make sure that it's stored for 12 months and even if you -- people forget to use it and then even 13th month and it still works perfectly, so those all are different -- like much more difficult things to do. So yes, so that's how it works.

And when you look at -- in terms of planning your production schedules, what kind of visibility do these customers give you? Is it like 3 months, 6 months kind of visibility that you have on your order book?

For the [indiscernible] or rather the consumable space as it's more like ex stock like is the customer's expectation and this is a specialty, and then we tell the customers that for these inks, we'll only make it to order and then the customers know. But the standard print [indiscernible] should be available ex stock and the printer normally our customers expect between 4 to 12 weeks for delivery, depending on the situation -- depending on the type of product or depending on whether it's a project or it's just like a replacement of some various factors?

Understood. And last question, as [indiscernible] the fact that it's an oligopoly industry and only 4 players. So what do you think would be the barriers to entry in this industry? Or is it easy for anyone to kind of set up operations in this industry.

So I think reliability and perceived reliability is the most important thing, obviously, first, the person needs to have a technology of high level. And then and what I'm saying is like we provide like we measured our uptime, giving like 99.4% something uptime and yes, I mean, the gap between us and, say, like some of the Chinese or the other types of guys has reduced and some of the other people also have good products, but it's like you can't just provide the uptime through the product. It's the product, the service, the spares, the expertise that they've built over generations, even if 2 engineers leave, you have to replace them without losing a beat and so on and so forth in that given area. So it's about having that entire system so that the customer when the sort of customers basic feeling is that I like you as long as I don't have to call you because some things are going wrong. So that's for to be the customers think about us. So obviously, there's a technology barrier. And then the second thing is, I do believe if you ask me personally, I think that it's not high value enough for customers to frankly care about and explore multiple alternatives outside us. So -- because this is -- it's a small part of it is budget. So they're not going to overthink about this is what my personal view is. So once they feel that they've got like I say 2 suppliers that they believe in sometimes they're not even interest in a third the fourth one. So even that's sometimes a challenge for us because if some customers already satisfied with, say, [indiscernible], they might not even consider also Videojet until they want to replace 1 of these 2 because they have -- they're not tapping in between. So -- and the same for us in both cases. So that's the sort of situation that's there because I mean, yes. It's like a minor thing. So it's not like a major cost or a major production cost by any state of imagination or the cost of the product. So it has a limited bandwidth also unless the printer doesn't work and the [ line steps ].

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.

A couple of points on the balance sheet part, Jaideep, sir. Please explain this goodwill account of INR 10 crores? This has been generated over the last year. Last year, it was INR 48 lakhs, and this year, it was INR 10 crores 21 lakhs. And secondly, sir, we have also seen this manufacturing and operating cost line items going up from INR 1.5 crores to 3 crores. So this is only in commensurate to the revenue from operations? Or what should we look into?

So I'll answer the fourth question first. The goodwill has come is in the consolidated financial statement. And it is basically coming off of the acquisition, what we've done in the Netherlands that pertains to that entity. So it is Markprint's goodwill which we have taken care of the consolidated [indiscernible].

Okay. So the Netherland acquisition, what is the -- what are we holding the equity percentage in terms of equity?

We are holding -- Control Print Limited holds 100% of the shares in Control Print B.V., which in turn owns 75% share in Markprint B.V. So Markprint B.V., when they had started out and in the process of their existence from 2015 onwards, they had -- they have goodwill in the books of accounts. So as a [indiscernible] which it has been like [indiscernible] our books of accounts.

So this will get amortized whenever, what should be the end use of the same? How is this line item going to?

Their accounting policy, they are saying it's going to be upwards 10 years and I would imagine it's about 6, 4 years to go for that [ analogy ] to happen.

More six years.

6 years more.

Okay. So then this will flow to the P&L part or only the reserve?

No, amortization will go to the P&L part.

Right, sir. So there will be an impact on the P&L on the consolidated numbers.

Consolidated number.

This year, there is an impact of the sale?

For the consolidated numbers?

Yes sir, on account of goodwill amortization?

Yes. If you look at the schedule, you can see it right?

Yes, it is the goodwill and amortization expenses totaling to INR 15 crores for the year, the same as it was last year. So there is no such impact.

Let me come back to you on this, Saket.

Okay. Okay. Okay. Shiva sir, I think it is the increase in the consumable percentage that now we should be looking forward with the installed base talking the 17,000 numbers now. So the growth drivers would be the increased consumable only. That should be the key number that we as investors should be looking going ahead, that should grow from here, the percentage in the revenue mix?

Yes, Saket ji, I definitely agree with you. But India, we still have to sell the printers to sell to consumers. So in regard -- because see, it's not depending on us, right? I mean at the end of the day, the customer decides how much he wants to print once we supply him the printer. So we have no choice in that.

Correct. Sir, on the innovative code part, how have that the performance of that JV of that subsidiary. How are they performing, I think they were to be aligned to our Indian operations. What is the update and any investments we are going ahead with innovative output?

So innovative closed at about INR 8 crores of revenue this year and if you add up depreciation, then in fact, it is ending in a cash profit, a minor cash profit of INR 30-odd lakhs. But then that company has got a good potential to grow. So the next year, the projected turnover is about INR 13 crores for them.

Okay. INR 8 crores is what we got from Innovative and from the Markprint the Netherland one, what was the?

About INR 9 crores from there.

And its contribution to the bottom line?

So yes.

I think Markprint was only from July, right if I am not incorrect.

5th of July.

Correct, sir. So it was not for the full year. Impact on the bottom line, sir?

The impact to the bottom line [indiscernible] Innovates ended up [indiscernible] losses. And in terms of [indiscernible], it is about, let's say, about INR 2 crores of additional amount.

Do you saw the Markprint one?

Markprint as well. INR 2 crores of additional amount.

INR 2 crores of additional amount. Correct. And for the depreciation part, I'll get back to you later if you want. I 1 -- and sir, on the V-shaped part of the 2D, this would be only the equity -- the benefit will be calculating to the shareholders only in the form of the profit that will be generated in the JV. So operationally, we won't be consolidating any numbers from that. It will be only the performance in the equity part that will come into play.

Are you talking about the V-Shapes JV?

V-Shapes JV part, yes.

V-Shapes JV got incorporated the 25th of March 2023. So in the 6 days of time, there has been no financial transaction in that particular company.

Next year, will it be only a below-the-line item wherein we will be getting the profit or the loss number as JV contribution or a top line and the -- all the numbers will flow to the top line.

Shiva, do you want to take this question on the V-Shapes thing?

That's completely. So you're saying that will it contribute to the top line or the bottom line?

Will close to the top line part or will it be a single line item as has been the came with the contribution from JV?

Consolidation question, I mean, it would be -- I mean, you know auditors, I really don't know. I'm assuming that we would -- it would be consolidated in our statements because we own 90% of it. I mean 100% of it right now, it will be 90%, then 70%, so I believe the rules if it's more than 51% or something, then we consolidate it. But I'm not sure.

Correct sir, what is the business plan for this year on V-Shapes?

No, no. Saket, we've just started this business. We are marketing it is looking promising, but it's too early to say. I mean, I think there were some questions on the coding and marketing business, and I said it's difficult to predict down the line. So and we will doing this business for years in years. So I mean, on something new, it's really difficult for me to [indiscernible].

Last small point. Firstly, on the royalty, any revision in the royalty rate that we are expecting. And about the Internet of Things type printers, which we were to launch [indiscernible], anything on that front? Sir, am I there online.

I couldn't hear that question, clearly, if I don't.

I'll come again, sir. Firstly, on the royalty part, when is the revision due, sir?

Can you repeat that again, what is -- what due?

Royalty revision.

Mr. Kapoor, sorry to interrupt you, but your line is breaking -- the audio is breaking from your line.

Sir, I was speaking about the royalty part. When is the royalty percentage division due and about the product launch in terms of the IoT printers, what's the update?

Our contract with KBA is till 2026. So the royalty percentages should remain the same or 2027 or something. But at least for the next few years, it's the same. I don't -- so I don't foresee the percentage of the royalties changing much up or down. And of course, as the percentage of non-CIJ business increases, that is substantially royalty free, if not entirely royalty free. So yes, as a percentage of revenue that royalty should decrease slightly, but yes, as a percentage of CIJ business, it remains the same and at least possibly for the next year because our partnership is [indiscernible] on both sides. We're happy with it. The second question, again, if you could just repeat it Saket, please.

Yes, sir. On the Internet of Things type printers, IoT based?

So in all our printers, which are new automatic the LAN cabling of the wireless or something is enabled wireless, we tend to use less because it's not totally reliable and continuous communication, so if you need to have a controller separate and the intelligent printhead, we just have to sit in the message once and the printhead can continue then it's useful. If we need to continuously send our data back and forth, then we don't tend to use [indiscernible], but it's already there in most of our products. As each generation comes out we keep updating user interfaces, other features so on and so forth.

Right. And any further update on the Videojet case and the Liberty Chemicals, the land part, anything you want to share or the status.

There's nothing, no movement at all to be honest, like it's really quite stagnant, to be honest.

We'll take the next question from the line of Naysar Parikh from Native Capital.

Yes. Just a couple more. One is that the pharma and F&B side when we are trying to obviously grow, how are those verticals doing for us? And are you seeing any more traction over there.

Yes. So I think it's been doing fairly good. I think like dairy has become a pretty big industry for us, from pretty miniscule industry. And of course, you put a lot of focus on that. Pharmaceutical, we've not had that much traction. Now because of the track and trace and the fact that we give an entire solution end-to-end, we are seeing some -- more on the track and trace side just selling printer side, we're seeing some more traction there. And Personal Care, we've always been strong in, for some reason, without being strong in the food, beverage and pharmaceutical space. So the Personal Care, we continue to do well, if not do better. And on food outside of dairy is still a bit of a black spot or whatever, but yes, we were working on different things. it's improving in -- but it's like it's -- I mean, of course, we say for like food and all, but actually, it's very sub-industry or specific application type thing that's there. So for us, bakery will be very different from dairy, which would be very different from ready to eat, so each thing is there. But it's gradually improving is what I'll say.

Yes. And building products would be how big for us? Like how 1 perspective would be building products for us today, roughly.

So building product basically is -- yes, sorry, Shiva, you can take it.

It also depends on how you define it, like what is included, like is cable and wire part of building products is like pipe part of building products, it's like paint and so like what I think is like the thing is that construction material is such a broad category that -- it really depends on how you define it. The cement part of building product and something else. So you know that -- what I'm just saying is the thing is that, that is something that you have to understand, obviously, it's our definition of a [indiscernible] construction materials it could be different from your thing. Jaideep, now you can answer that question.

So basically, Naysar, I mean, for the building material, what I would consider is that cement, steel or the plywood or the construction materials, laminate, even the pipes use. So all these if we put together, we build sufficient [indiscernible] into this kind of industry, which is the building segment industry.

And what percentage of revenue that would be?

Well, our revenue is skewed all over the [indiscernible]. There is no major concentration I can really pinpoint to anything, so like we don't have a major concentration of business, except for the pipe industry, built about 17%. But otherwise, it's I mean more or less everything is like sub-10 limits.

Understood. Okay. And generally, I think last year, we have done around INR 1.4 lakhs for printer if you look at like consumables, spare, sources, maybe all put together, so going forward, how do you see that number shaping up? And are you looking at any price increases? Or are you seeing competition take price increases and on the consumable side and new things that we could see some price pop in FY '24? Or in general, how will that INR 1.4 lakh number shape up in your sense?

Yes. So it's not possible to predict anything because like I said, we had undertaken some price increases and I don't know if the 1.4 lakh reflects that or not or to what extent, but is that we've got a basket of products that number sort of quite misleading because if I take all printers, all printers don't give us the same amount of business for printout. And like we said for proprietary sake, we don't actually disclose business -- the aftermarket business for type of printer that we receive again because you're aware that some of our competitors listed and so on. So it depends only on the mix of the basket of products that we are selling and because we are selling a lot more non-CIJ products, especially the thermal inkjet. And a lot of them are used to print on the cartons. So what happens when you say if you make a pack of [indiscernible] coke cans. And then coke cans are then packed in a carton and we're printing on the carton, so the carton printing is we see a large number of thermal inkjet specialty. And that tends to have less business for printer because you -- although the print is quite large, you also have less cartons as compared to the primary product of -- so the secondary printing. So even like that can change the mix a little bit slightly downward, but the price increases or the other things have shifted slightly. So it's a bit in balance, but it's really difficult for us to predict. And there's no -- we can't target it because the target is to increase the overall volume of installed base business rather than look at the specific averages, which means we sell what we can sell as easily as we can sell it rather than get obsessed with maximizing those averages.

The next question is from the line of Karan Bhatelia from Asian Market Securities.

Am I audible now?

Yes.

I'm saying really other manufacturing expenses are INR 16 crores in this quarter, significantly higher compared to last year and previous years. So which of the cost element has gone up?

Yes, Jaideep, do you want to get back to that question.

Sir we can't hear the audio from the line. I'll disconnect and rejoin the line, sir. [Operator Instructions] Ladies and gentlemen, thank you for patiently waiting. The line from Mr. Jaideep Barve has reconnected. Over to you, sir.

Should I repeat my question?

Yes, please.

Jaideep, other manufacturing overheads in this quarter is INR 16 crores, which is slightly higher compared to any other quarter or any other year, so what explains this which expense has gone up significantly?

You are talking about not the manufacture overheads, you're talking about other expenses, right?

INR 16 crores for this quarter.

Yes, which is other expenses, right?

Yes.

So other expenses, basically the reason is, if you look at the expenses as compared to sales, the ratio is about the same.

I don't see that because the ratio is somewhere at 19%.

No, from 13%, it has gone to 14%, if you take it on a sales basis.

How is this possible? Other expenses -- the 19% of sales. If I take INR 16 crores on INR 84 crores. It is somewhere at 19% compared to much lower numbers for any other quarter historically. So just wanted to understand which cost element under this basket has gone up significantly?

So it's -- basically, it's about the same. I mean, as compared to sales, it's more or less the same thing. I mean we are looking at better economies, better rationalization of the costs, which will definitely go down in the next year. I'm seriously concerned that if you're counting at 16%, I mean how did you arrive at 16%.

I'm arriving at 19%.

19%, okay. So basically, you've added have you -- I think there's a grouping of expenses that we might have done. The answer is it's pretty much in the line of sales, but there is sufficient like opportunity for us to optimize it a much better way so as to improve our margins in the next year also.

Yes, that is correct. That is going ahead, right?

Yes, going ahead, no, but if you look percentage of sales, there's not much of difference.

Okay. Okay. And on the mask business, I believe for FY '23, the total yearly sales is not more than INR 5 crores, INR 6 crores, so how do we take this business going ahead? Any outlook on that?

See, we can't plan, right? Anything depends on the COVID situation, and the government's initiatives in properly getting the [indiscernible]. So this is like quite a thing which is depending on the health awareness and the conditions [indiscernible]. So at the moment, we don't have much of a visibility on that. But at the end of the day, just from a pure hygiene factor, use of mask is like it started a bit late in India. So wherever possible, we've got like 6 customers like Amazon or like some of the supermarkets, they keep on ordering us. So unless there's a major pandemic coming in, we can't have any visibility on the mask line.

And we've capitalized the entire investment we made historically?

So it's done. I mean, obviously, we have capitalized it, and then the depreciation according also.

Okay. Okay. Any closing remarks to make, Jaideep or Shiva, anyone?

Well, we would just like to thank all of you, like supporting our company and encouraging us and we'll keep on doing better year-on-year, and we hope to see you in the next quarter, which is the first quarter for 2023-2024. Thanks a lot.

And yes, from my side also thanks to everyone, I think a lot of kind words and great questions coming up. It's good for us to get a lot of points of you. Like I said, there are some things. It is difficult for us to project or predict, we don't -- we avoid doing that. I know that frustrates some people and some things we can't share very detailed information because our competitors are not obliged to do so, and we don't want to be back foot to them for certain reasons. And as far as some things, of course, like I said, we've got a longer-term viewpoint when it comes to a lot of strategic initiatives like whether it's V-Shapes or the digital printing, or the track and trace, we're looking at over -- when you're looking at these types of investments, so you're looking at whether this would benefit us in 2030 or something like that. So I understand there's a lot of questions. And of course, we're also looking at whether we are going in the right direction, but we've got a slightly longer if you own things because what we want to do we want to make sure that we are able to execute in the longer term, and it's not short-term driven. So just an idea because I know that there's not been as much movement on these things is what everyone would want. But we just -- we have a different sort of timeline on some of these cases mentally. So obviously, and a limited amount of bandwidth. So maybe that's why it's something that we need to improve upon.

Thank you. Ladies and gentlemen, on behalf of Asian Market Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.