Financial Performance Highlights

Standalone Results (Q2 FY27):

  • Total Revenue: ₹134 crores
  • Operating Revenue: ₹131 crores
  • Cost of Goods Sold: 41.65% of operating revenue (improved from 42.32% in previous quarter)
  • Manufacturing Costs: 2.26% of operating revenue
  • Employee Costs: 17% of operating revenue (down from 18% in Q2 FY26 and 19% in full FY26)
  • Depreciation: 3.5% of operating revenue
  • Other Expenses: 15% of operating revenue (up from 13% in previous periods)

Half-Yearly Standalone Performance (H1 FY27):

  • Total Revenue: ₹241 crores
  • Operating Revenue: ₹235 crores

Historical Revenue Comparison:

  • FY26: ₹460 crores
  • FY25: ₹395 crores
  • FY24: ₹347 crores

Consolidated Results (Q2 FY27):

  • Operating Revenue: ₹144 crores (up from ₹112 crores in Q2 FY26)
  • Cost of Goods Sold: 44% of operating revenue (up from 40% in Q2 FY26)
  • Manufacturing Costs: 2-3% of operating revenue
  • Employee Benefit Costs: 20% of operating revenue
  • Depreciation: 3.5% of operating revenue
  • Other Expenses: 14% of operating revenue

Business Segment Analysis

Coding & Marking Business:

  • Contributes 94-95% of total operating revenue
  • Top performing verticals: Pipes, food, dairy, cable, wire, FMCG, steel, wood
  • Market leadership in: Cement, plywood, sugar, dairy
  • Business outlook described as "exciting" with new customer additions
  • Ongoing development of new technologies in printers, inks, and cartridges
  • Target margins: 60% gross profitability and 30% EBIT

Track & Trace Division (QRiousCodes):

  • Business outlook described as "very positive"
  • Developing new solutions and acquiring new customers
  • Good traction in copacking activities in packaging division
  • Pipeline generation for new machines for laminates and co-packing activities
  • Management strengthened and operations more tightly controlled
  • Over ₹100 crores invested over the last six years
  • Currently running pilots with top 5-10 Indian pharmaceutical customers

International Subsidiaries:

  • Subsidiaries located in Netherlands, Italy, UK, UAE, and Sri Lanka
  • Management focus on increasing revenue and optimizing costs
  • Markprint subsidiary described as profitable
  • CP MEA (Middle East operations) started January 2025, expected to break even this year
  • V-Shapes and Codeology operations showing reduced losses

Subsidiary Performance Details

Loss Reduction Trend:

  • March quarter: ~₹12 crores PBT loss
  • June quarter: ~₹8 crores PBT loss
  • September quarter: ~₹5 crores PBT loss

V-Shapes Business Update:

  • Cost basis reduced by 25% from original levels
  • 65-70% of original staff replaced with new personnel
  • Increased use of outside consultants rather than in-house
  • Sales team expanded from zero to three people
  • Machine reliability issues being addressed through design fixes and retrofits
  • Target to complete machine redesign by January/February 2027
  • Materials cost reduction through manufacturing setup in Assam (currently suspended due to incentive issues)
  • Co-packing business progressing with regular orders

Regulatory Environment

Track & Trace Market Opportunity:

  • Current market size: ₹600-700 crores
  • Government mandate for 300 brands already implemented
  • Upcoming mandates: Top 1,000 brands (2027), anti-infectives/antibiotics/vaccines (2028)
  • Psychotropics and narcotics also coming under regulation in 2027

Management Strategy & Outlook

Core Business Focus:

  • Consolidate coding and marking business
  • Increase install base and provide robust solutions
  • Implemented certain price increases
  • Target reduction in input costs and overheads
  • Expect profitability improvement

Technology Investment Philosophy:

  • Conscious long-term decision to invest in IP-protected products
  • Focus on creating sustainable, high-margin businesses
  • Willing to invest in international business, Track & Trace, and packaging business
  • Emphasis on creating businesses with strong moats and differentiation

Operational Improvements:

  • Optimizing procurement costs
  • Focusing on economy, efficiency and effectiveness of operations
  • Structural changes in overseas subsidiaries including staff reductions
  • Implementing better marketing and sales strategies

Conference Call Participants

Management Team: Shiva Kabra (Joint Managing Director), Jaideep Barve (Chief Financial Officer)

Analyst Participants: Madhu Rathi, Kewal Shah, Saket Kapoor, Praneeth Bommisetti, Samad Singh, Jayesh Gandhi, Parag Hemdev, Moksh Ranka, Aryan Kadam