Financial Performance Highlights
Standalone Performance (Q1 FY27)
- Total Revenue: ₹107 crores
- Operating Revenue: ₹105 crores (compared to ₹100 crores in Q1 previous year)
- Cost of Goods Sold: 42% of operating revenue (improved from 44% in Q1 previous year)
- Manufacturing Costs: 3% of operating revenue (consistent with prior periods)
- Depreciation: 4% of operating revenue (consistent with earlier periods)
Consolidated Performance (Q1 FY27)
- Operating Revenue: ₹115 crores (compared to ₹111 crores in Q1 previous year)
- Cost of Goods Sold: 43% (was 42% in prior year)
Historical Context (Full Financial Years)
- FY26: ₹460 crores
- FY25: ₹395 crores
- FY24: ₹347 crores
- FY23: ₹295 crores
Business Segment Analysis
Coding & Marking Division
- Contributes approximately 95% of total operating revenue
- Top-performing verticals: Pipes, food, dairy, cable, FMCG, steel and metal, wood
- Market leadership positions: Cement, plywood, sugar, dairy
- Business outlook described as "promising" for next three quarters
- New customers being added with new solutions in printers, inks, and cartridges
- Expectation of improved contribution margins
Track & Trace Division
- Market size estimated at ₹600 crores
- Company revenue approximately ₹20 crores in previous financial year
- Ongoing pilot projects with major pharmaceutical companies
- Unique propositions being tested with 2-3 key customers
- Expectation of better visibility on solutions in Q2
Packaging Division (V-Shapes)
- Facing significant execution challenges rather than demand issues
- Focus on improving internal production stability in India and Italy
- Target industries: Cosmetics and nutraceuticals (price insensitive with clear use case)
- Food industry (price sensitive), Pharmaceutical (long gestation period)
- Historical context: CP Italy peak sales were over €12.5 million in 2021 with 70+ machines installed
- Current focus on streamlining costs, reducing manpower, and improving technical coordination between India and Italy
- ₹65 crores invested to date with tech transfer of IP to Control Print underway
- Expected breakeven: First half of next financial year (not second half of FY27)
International Subsidiaries
- Markprint: Digital printing solutions being localized and integrated with Control Print technology
- Codeology: Print and Apply business localized with market potential of ₹25-30 crores based on competitor performance
- MEA FZE: Expected to break even this year, serving as sales outlet for international markets
Operational Challenges and Strategies
Geopolitical Impact
- Lost approximately few crores worth of consumer sales due to Iran-related issues
- Fluctuation in polymer prices affecting extrusion business (biggest sales segment)
- Volatility in raw material prices creating uncertainty for customers
Cost Management
- Noted sticky cost increases post-COVID with suppliers exploiting qualified product status
- Implemented price increases and surcharge since Iran war began
- Focus on economy, efficiency, and effectiveness of operations to reduce operating costs
- Management committed to improving revenue and optimizing procurement costs
Manufacturing Expansion
- UNNATI project in Assam for plastic film manufacturing suspended due to government incentive scheme suspension
- Equipment already ordered for V-Shapes materials manufacturing
- Project in limbo awaiting government updates on scheme resumption
Regulatory Environment
Pharmaceutical Track & Trace
- Government discussion paper to expand QR code regulations from top 300 brands to top 1,000 brands
- Potential expansion to cover vaccines, anticancer medications, antimicrobials, and narcotics/psychotropic drugs
- Could increase from 2,000 SKUs to 25,000 SKUs
- Market potential could expand from ₹600 crores to ₹1,500 crores
- Implementation timeline uncertain (potential July 1 next year start with phased approach)
- Industry feedback still being collected, not yet enforced
Management Commentary and Outlook
Core Business Confidence
- Expect 10-15% growth in standalone Coding & Marking business for the year
- Target margins: 60% gross margin, 30% EBIT margin on core business
- Q2, Q3, Q4 business described as having "positive trend"
- No major market outlook changes expected post-COVID
Subsidiary Strategy
- Packaging business: Focus on streamlining, stabilizing quality, and growing sales for expansion next year
- International businesses: Monitoring with focused growth targets and mandated business plans
- No further major investments planned in subsidiary businesses
- Decision framework: Will pull plug if no path forward, but currently believe opportunity exists
Technology Development
- Multiple patents around packaging and track & trace solutions
- Long runway expected if solutions are successful
- Working on solving QR code counterfeiting issues with unique propositions
Participants
Management Team:
- Mr. Shiva Kabra - Joint Managing Director
- Mr. Jaideep Barve - Chief Financial Officer
Investor Relations:
- Kaptify Consulting (Vinay Pandit)