Control Print Q4 FY26 Earnings Conference Call Transcript

Q4 Total Revenue: ₹138 crores (Q4 Previous Year: ₹114 crores)
FY26 Total Revenue: ₹460 crores (FY25: ₹395 crores; FY24: ₹347 crores; FY23: ₹295 crores)
FY26 Operating Revenue: ₹446 crores (Previous Year: ₹385 crores)
Cost of Goods Sold: 41% of operating revenue (Previous Year: 42%)
Manufacturing Costs: 3% of operating revenue
Employee Costs: 19% of operating revenue (Previous Year: 18%)
Printer Sales (FY26): 3,064 units

Coding & Marking: Remains the main profit center. Top verticals include Pipes, Food, Dairy, Cable & Wire, FMCG, Steel, Metal, and Wood. Market leadership maintained in Cement, Plywood, Sugar, and Dairy.
Track & Trace Division: Business outlook is good. New solutions developed and new customers acquired. The division is now at breakeven or marginally profitable.
Packaging Division: Focus on core packing activities, laminates, food packing, and new machines. Operations are now "strictly controlled and tightly measured."
PPE & Safety Division (Mask Lab): Now operates trading in hardhats, suits, helmets, gloves, blankets, and shoes alongside masks.

Significant discussion focused on the performance of international subsidiaries, particularly CP Italy (packaging business).

CP Italy: Acknowledged as the primary source of consolidated losses. Management cited a longer-than-expected product stabilization and R&D cycle. Losses are attributed to extended investment in developing a differentiated IP platform. An investment of ~€32 crore is being made to formalize IP ownership under Control Print India and explore licensing opportunities. Fixed operating costs for CP Italy are estimated at €2-€3 million annually, with R&D expenses comprising ~€100,000 per month.
CODEOLOGY (Print & Apply): Business is being restructured to scale down lower-margin core activities and refocus resources on the packaging business and select coding products. Technology has been transferred to India.
MARKPRINT (Digital Printing): Has secured good contracts and is expected to see growth from rolling out existing installations.
QRiousCodes (Track & Trace): Described as being at breakeven or marginally profitable.

Management remains committed to cost optimization.
A surcharge has been implemented on customers to counteract increased input costs stemming from geopolitical supply chain disruptions (specifically mentioned: Iran conflict impacting chemical supply chains) and rupee depreciation. This surcharge is expected to remain till the end of the calendar year.
The increase in employee benefit expenses is primarily due to:
Implementation of the new wage code, leading to a recalculation of leave encashment and gratuity liabilities (impact of ~₹3.5 crores).
Provisions for sales/service incentives and loyalty bonuses for key management personnel.

Strategy: Conscious shift from a pure-play coding/marking company to one building proprietary IP platforms (Coding, Track & Trace, Packaging) for long-term growth, accepting short-term profitability sacrifice.
Coding & Marking: Focus on consolidating by increasing the install base and providing robust solutions.
Track & Trace: Focus on completing pilots with two major Indian pharmaceutical companies for a differentiated blockchain-based solution. Success could lead to large-scale rollouts and set a new industry standard.
Packaging: Goal to increase revenue in printer sales, co-packing, and laminates internationally. The new UNNATI factory in Guwahati, Northeast is a key project aimed at reducing packaging material costs by ~40% to improve competitiveness and leverage government incentives:
₹7.5 crore subsidy on ₹15 crore Plant & Machinery investment.
5% interest subsidy on term loans for 6 years.
GST refund equivalent to Plant & Machinery investment over 10 years.
Guidance: No explicit quantitative forward guidance provided. Management expressed confidence that losses in CP Italy would reduce and potentially reach breakeven in the current year (FY27).

Subsidiary Losses: Multiple analysts expressed deep concern over the continued and open-ended losses in CP Italy. Management defended the strategy as a calculated investment in IP but acknowledged the extended timeline and need for patience.
Track & Trace Potential: The market size for Track & Trace in India is estimated at ~₹500 crores. Management believes their IP-differentiated solution could capture significant share, especially if current pilots with large pharma companies are successful. Margins are expected to be in line with or better than the core coding business.
Growth vs. IP: Management framed the strategic choice as becoming a long-term IP owner (like NVIDIA, SAP) versus a stable but IP-light service provider (like legacy IT companies).
Government Regulation: Discussion on the potential expansion of drug serialization (Track & Trace) mandates from 300 to 946 drugs, though no notification has been issued. Challenges with current counterfeiting in the existing system were noted.