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Control Print Ltd
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Good day and welcome to the Q1 FY '23 Earnings Conference Call of Control Print Limited 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 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, Rutuja. A very warm afternoon and welcome all to the Control Print Limited First Quarter FY '23 Earnings Conference Call hosted by Asian Market Securities Limited. From the management side, we have with us Mr. Shiva Kabra, Joint Managing Director; and Mr. Rahul Khettry, CFO.
I shall now hand over the call to Rahul for his opening remarks, post which, we shall open the floor for Q&A. Thank you and over to you, Rahul.
Thank you, Karan.
Welcome, everyone, to the First Quarter FY '23 Earnings Conference Call of Control Print. We appreciate you all taking out time from your busy schedule to attend the call. Hope you and your loved ones are safe and healthy. Mr. Shiva Kabra, Joint Managing Director, joins me on this call. The detailed presentation has already been put up on our website as well as the intermission to the stock exchanges.
Let me give a brief analysis of the financials of Q1 FY '22/'23. The manufacturing activities in Q1 maintained the upswing from Q4, and most of the industries continued their production to meet the higher demand. The increased production was clearly visible in the higher requirement for consumables, which is beneficial to the coding and marking industry.
The last couple of years has been extraordinary situation when the strength of the company is tested, and we can assure you that Control Print is geared up for any challenge. We are financially stable and robust and will continue to perform in spite of unforeseen challenges. This stability of Control Print has also been reaffirmed by credit rating agency CRISIL with an A rating after considering the short- and medium-term impact of the COVID pandemic. Our investors can maintain their belief on the company's management for an optimistic future.
This quarter's performance was normalized as the previous two Q1 were marked by COVID. We delivered growth in revenue and margins and volume growth. These are encouraging signs as Q1 leads the way for the year, and this momentum should continue in the coming quarter.
Revenue for the quarter witnessed year-on-year growth of 21.75%. The reason for growth in revenue was due to good traction in consumables as the industrial production increased, though we believe it is still not at the optimum level and there is scope of improvement. The production of some of the industries was lower due to raw material shortages. So there is still scope of growth in the overall production volumes.
The gross margin improved due to better product mix skewed towards consumables. Profit before exceptional items increased 66% year-on-year and remained strong at 21.5%. EBITDA increased 50% year-on-year and improved to 27.2% and continues to remain above 24%. PAT increased by 34% year-on-year. The company maintained healthy margins with profit before exceptional items at 21.5% and EBITDA at 27.2% with scope of improvement due to higher revenues triggering economies of scale.
Let me brief you on the performance of various divisions, products and business segments.
Consumables had a good traction, and the increased installed base will drive the business in the coming quarters. The company continues to penetrate competitor accounts in key sectors like building materials, FMCG, pharma, dairy, et cetera, to strengthen its market share. The company intends to expand its global footprint and has formed a holding company in Netherlands to acquire a 75% stake in MARKPRINT B.V.
The FCC division witnessed year-on-year growth of 30% as the production of the customers was increasing. The growth was mainly due to improved production of some of the industries where we have a stronghold like dairy, health care, steel and metals, food, FMCG, pipes, cable and wire, distillery, agrochemicals; and was also encouraging to see growth in some of the upcoming sectors like pharma, paints, wood.
Product verticals of TIJ, TTO hybrid continued to deliver strong numbers, and these products are penetrating the market. We have dedicated managers and teams who drive these verticals with focus on dairy, beverages, bakery, frozen foods, ready-to-eat, pharma, packaging, plywood, lubricant, coding, carton coding. The new products continue to grow every quarter, which builds confidence on the potential of these products in the coming years.
Laser business is going steadily as product technology has been improved, and the new team is driving the business. This has yielded good dividends with positive response from customers and new opportunities being captured. Service revenue has shown good numbers, which contributes towards profitability.
Our strategy for separate verticals for key account and OEM business, our focused approach is giving us positive results and contributing towards growth. LCP business reported good growth for the quarter with revival in some cement accounts and pan-India supplies in the sugar industry. With new government directives regarding marking and coding in agrochemicals and health care, plastic bag and waste management, we expect some good contribution to our business growth.
Customers, especially large business organizations, are looking for coding and marking solutions so as to avoid counterfeit of their product. We are offering complete solutions, including availability of our in-house software development team to provide tailor-made solutions as per our customers' expectation. To intensify our reach to the customers, we have strengthened our inside sales team for telecalling the customers to generate good quality leads. This is helping the field sales force to improve their strike rate for order conversion.
The company has strong cash flow and the trend is expected to continue. Fundamentally and inherently, the company remains strong, and we are focused on our plan and strategy as we are confident of the growth potential to deliver positive results.
The floor is now open for questions.
[Operator Instructions] The first question is from the line of Madhuchanda Dey from MC Pro.
Congratulations on good set of numbers. I have just a couple of questions. The first is, what is the total import content in the raw materials? And to what extent do you think that the current depreciation will impact your margin?
And the second question is more housekeeping. Just wanted a breakup of the revenue for the quarter between printer sales, consumables, et cetera. And how many printers did you actually sell in the quarter? The CIJ and the new lines of printers, if you can throw some light on the same.
We'll start with the import. It's generally between 25% to 30% sometimes now with the shortage of the electronic components and price increases. That could vary by a couple of percent. But generally, it's in the range of 25% to 30% of our requirements. Though we still have a lot of import substitutes and we can procure them from India so at time there are shortages and quality issues. So considering that, we still maintain 25% on the import front.
Regarding the breakup of the revenue, for this quarter, the printers were between 18% to 19%. The consumables was around 56%, 57%. The spares and service was around 22%, 23%, and the balance was on the MAT division.
The latter part of your question was how many printers that we sold in the quarter. So this quarter, we had a sale of 750, just a little above that. We have about 750 printers for this quarter that we managed to sell.
And if you could give us the breakup between your CIJ and the new lines of printers?
Generally, CIJ is still the dominating sales. It's generally between 65% to 70%. The complete breakup, we don't put it up in public domain because it's not available for our competitors also.
The next question is from the line of Vaibhav Badjatya from Honesty and Integrity Invest.
So on the -- this -- if I compare FY '22 total numbers versus FY '20 numbers, so sales of services has gone up significantly, 50% growth in sales in these 2 years that is outpacing our total revenue growth. So can you please explain what is happening here and why these services revenues are going up significantly?
Can you just tell me which year you're comparing?
So I'm talking about FY 2020 numbers, pre-COVID basically, FY '20 represents most of the pre-COVID sales. So if the sale of services as seen in the annual report is INR 22 crores there versus in FY '22, it has increased to INR 33.4 crores, so nearly 50% growth there in the matter of 2 years.
Some of it could be because of regrouping earlier. Some of our rental revenues were reflected probably in service. And then with this Ind AS coming in, the auditors preferred to show it as part of revenue. That is one of the reasons. And the other is, genuinely our installed base has increased. So the service revenue and the sales have also gone up. So it's a mix of these 2 items.
Got it. And secondly, similarly on the imported sales of -- if I see the sales of traded consumables, that has also gone up in the same period, FY '20 to FY '22, in 2 years' time frame. So what -- can you help us understand the reasons for the same? I mean, is it...
Our volumes as the installed base is increasing so we have some of these specialized inks which we need to import, and that could be the reason for that increase of traded. As well as one of our printers, TTO, some portion of it is also imported. So volumes of that increasing will also lead to traded items increasing.
So we do a lot of activities in out after the printers come in, but some of it does get reported as traded. So that volumes if you're comparing it to '20, so volumes have gone up by at least 30%, if I can say, over the....
So this import is -- this ink -- imported ink that is coming there, it's used in which kind of printers?
it was used mostly in TIJ printers but for specialized applications. Some of our customers need a high-grade ink or they have special environments to work in, let's say, high temperature or a very low temperature. They need special bonding requirement or there could be a UV print requirement. So there are very special requirements for which the customer is willing to spend that extra money is -- which we need to sometimes import those. Volume not being too big, it's not feasible to try and manufacture in-house.
Got it. And lastly, if I...
Having unique application.
And lastly, if I broadly compare the consumable sales, right -- the total consumable sales of the company. So it's more representative of what's happening on the IIP front and what's happening in the broader economy, right? So the GDP broad -- GDP number and IIP, barely back to pre-COVID level. but our sales in these 2 years have grown tremendously. I mean nearly -- it's gone up nearly 30% -- I think 30%, 35% in these 2 years from FY '20, '21 and then '22. So is it to do more with the pricing because of inflationary environment? Or the volumes have significantly -- or has also significantly gone up? And if yes, then which -- what could be the drivers of these higher volumes? Because that is not getting reflected into the broader GDP numbers.
IIP has definitely increased from pre-COVID. And like we had mentioned in the previous calls also, even during pre-COVID times, our printer sales were always on a very high. And in fact, those years, we maintained probably the highest printer sales, which we said is encouraging because once the printer is sold, the consumable will follow as soon as the productions are normalized. And that's what we will do probably see now or that -- one of the reasons is higher installed base compared to 2 years ago.
And also, we have said that some of the industries which we believe we have a stronghold, still there is a gap. And once their production increases, our volume could further go up. So we still hold that. We still don't think that the production of our customers is at an optimum. We still feel there is a 10% or 15% gap where the same printer can give us higher consumables. We -- that's the field report we get from our sales team across pan-India.
And so most of the growth, I'll be honest, is volume growth. So though we have gone for price increase because a lot of costing for us has also gone up because of the input prices, but that would mostly be in the range of 5% to 6%. It's a highly competitive dynamic. And it's tough to get price increase from all customers, so we keep trying. But many of our customers have generally given us a price increase in that range. Also some of it, freight, freight increase and stuff like that. So if I would have to put the weightage, I would put most of it on volume increase and maybe 10%, 15% because of price and freight and other stuff.
Okay. Got it. And lastly, on this acquisition that we are doing...
See one -- couple of questions. Maybe you can come back to the queue because the question you started will come up in somebody else's.
Sure. No problem. Yes.
Thank you.
The next question is from the line of Deepan Shankar from Trustline PMS.
Congratulations for good set of numbers. So firstly, wanted to understand, so the sharp improvement in gross margins and EBITDA margins. So understandably, so consumable share has gone up. So are we seeing this quarterly run rate of printer volumes is similar or it has come down during the current quarter?
So basically, printers are at a similar level, around 17% to 20% is generally every quarter we have projected. This quarter, the reason for gross margin improvement and EBITDA improvement, like we mentioned, is that a higher percentage of consumables have gone in. So in the previous couple of years, we've had consumables between 50% to 52%, which I said that that should improve. And this quarter, it has gone up to 56%, 57%. So that is one of the major reasons for better -- and like you all know that the MAT division is definitely going to be a little lower than it has been previously during the COVID days. So I guess the coding and marking is making up for the loss of MAT revenue, which we saw was very strong in the previous year.
Okay. Okay, okay. And is there any change in government regulation for any particular sector, which can favorably increase our printer just coding and marking consumption?
Yes. We did -- maybe Shiva, if you can answer that, that would be better. Shiva, are you there?
In that -- into this thing, you see the -- it's very difficult to predict what the government will do and also in a lot of places, you know how much lobbying is resulted in by the affected industry and then what the final outcome is. But in general, the government has increased the amount of rules, especially around pharmaceutical, to ensure more traceability through the supply chain. So that's what we expect.
You might have seen there were some 1, 2 articles that came out, I think the top 300 medicines of the country. They will ask them to print a variable QR code, for which they'll need someone like our printers. You get to print through the supply chain. But of course, that's what they're proposing, but it's not happened as yet. So there could be more rules and regulations coming in, in general as regulations have increased over time. They've not decreased.
In between, there was also a new legal metrology requirement, which I believe was that they have a printed price per 100 grams, the price per gram, something of that sort. So again, if they have to do something like that, especially the price structure, then they'll have to use our printer on that product. So there are some things that are there, but it's not 100% confirmed.
So there's always a lot of talk about new -- the government holders proposal, lot of stuff. But then look, of course, each industry has its own reasons, or they find it difficult to adapt their own rationale to the government of why they shouldn't project stronger route. And in general, I would say that the amount of regulation is probably sufficient, but it's definitely going to increase on the pharmaceutical side. We've seen the liquor side also has increased, and the amount of it has increased as well.
Shiva if regulation becomes mandatory, so are we foreseeing some of new printer sales or also for the existing pharma companies or it's only the consumption which will go up if this becomes mandatory?
No. For printing variable, QR codes is definitely the type of equipment that necessarily, it is more expensive. So the people have to avoid the entire set of lines, I think. And if you see a lot of the high-volume medicines actually have barely any printing on them. If you look at cross, something like that [indiscernible] don't have an action in their prints. They are, in fact, coming from no coding to light -- only very well printing.
So the other thing is it's -- I mean when the regulation is enforced, you should think about right now. I think eventually, it will happen, but eventually can be like now in the next 6 months or it will be like 5 years from now. But I think the regulation should happen, and some companies will start preparing in advance to start -- to do the new lines in advance of that so that they are prepared for the new regulations at the time that they're having.
I hope that answers your question.
Mr. Deepan Shankar, does it answer your question? As there is no response, we'll move to the next question, which is from the line of Nemish Shah from Emkay Investment Managers Limited.
So can you share what will be the current installed goods for us now?
Sorry, you're not very audible. Can you speak a little louder?
I just wanted to know what is the current printer installed base?
The storage of printer, we crossed 15,000 in the previous year. And this time, we've done about 750-odd printers in Q1. So we would definitely be more than 15,500 after considering some of the lost printers.
Okay. Got it. And so on a steady-state basis, if you could just help us understand what is the average realization for our consumables per printer or if there is some number on that, that you can help us with?
Generally, clock between INR 1 to INR 1.1 lakh per printer. But now the mix is changing between different printers. The consumption is generally higher in CIJ printers as compared to a TIJ or TTO. So the average compared to previous years is a little lower, but still INR 1, INR 1.1 lakh is what we're trying to clock.
Okay. And so this 1.5 of realization should ideally increase by the increased production of basically for the industries, right?
Yes. As the production of the customers increases, definitely, it will go up, the things. So moderator, I think Mr. Shiva Kabra has dropped out. He just sent us a message. So can you just check that?
Let me just check, sir. One moment.
By the time, we'll continue with the call. So yes, as the production of our customers increases -- now if they go from a single to a double shift or a double shift to a triple, the same printer is going to give us higher revenues of consumable spend. That's what increases the average. But it's completely dependent on their production planning. It's not something that we can control.
Right. And do we have some similar number for spares as well? What will be the realization for the printer for spares?
Spares like, there are more than 400 parts on a single printer with different SKUs that we have. So that can range from INR 100 to maybe INR 50,000. So that's difficult to say.
Okay. Understood. And if you could just throw some color on the acquisition front or...
On the -- sorry, could you repeat that?
On the acquisition that we made in labels so the...
Probably Shiva can take that question. Shiva, are you there?
Yes, I'm here. Sorry, I got cut off the call, but I'm back.
Recent acquisition.
On operate, right? So yes, so -- as you know, we are in coding and marking, our industry, which is sort of the intersection of digital printing and packaging like at a very small level, which is just for the very basic requirement, which is date code, batch code, expiry dates and statutory information, I'll say, and certain minimal amounts of information for printings on cable wire and so on. What's happening because a lot of customers do want to print more information, and we've discussed that before. So a lot of people, they want to print ingredients on the production line. A lot of people might want to print the entire list of mono carton on the production line. So they want to personalize more and have a lot more flexibility.
So MAT print already makes equipment, which is capable of doing this type of work. We do also, but our level of -- the technical level of our printers is significantly less than that of a MAT print and so is the cost point. So the equipment can be used for -- actually almost eliminate the -- some of the preprinting that's there on the package and basically personalize the packages to a much higher extent. So that's what their business is about.
And our primary method or reason for the purchase is so that we can acquire this technology and use it to boost the top end of our range in India. It is going to take time for us to obviously employ it in the market and get the benefits out of it, but this will help us to grow our sales in the Indian market. But at the same time, MARKPRINT itself is doing very well, and they have also doubled in the last 2 or 3 years, and I can see that pace continuing. So I think that they themselves will be growing in the European markets or -- especially in Scandinavia, Germany and North America -- I mean America and Canada. And that's something that we will help them -- help support their growth by investing in them to expand in those geographies.
So I'm really expecting that it's going to be a dual powered acquisition for us in terms of MARKPRINT itself being -- doing very well and continuing that growth rate, hopefully, even faster and that goes for a much bigger ways in coming times and for us to benefit and to be able to extend our product range and to be able to cater to much more sophisticated and complex requirements of our customers and our markets.
So it's a bit of a strategic acquisition, so I'd say not like a simple market share gain or anything like that. So it's more of a technology is that we needed to acquire.
Yes. Yes, got that. So basically, this sophisticated print -- basically the high-end printers, so we would be looking to just to gain the technical know-how and manufacture it in our India plant or just import those printers from MARKPRINT?
So right now, we're just importing a few -- a couple of things, but we're already going to start localizing them. We'll have to change it because, I mean, obviously, his structure is using his components, his everything, his whatever. So we have to see how we can localize it but also reduce the cost to some extent significantly, for which we'll have to work quite significantly. So the idea would be to do the same configuration he has and manufactured in India and maybe even take a cut in the upfront margin on the printers to help grow the market out here. But at the same time, we have to work on actually lowering the cost base of those printers because the Indian market is very different from the Benelux, Germany, Scandinavian, Northern European and Canadian whatever market that you have. And that's something we'll be working upon.
So we already have some of the equipment on the way out here. And I think we have some information with exchanges going on. So we'll be working on it. And of course, it depends -- at the end of the day, I do want to point out, which is not very obvious from my statement so far, that it depends really on the application that we're talking about. Because so -- we can do a lot of types of printing. We can print a lot of different things, a lot of different packages, a lot of different items. It depends on what the specific applications that we are targeting in India and what we feel will succeed in the Indian market. So accordingly we will focus on those specific items and try to come up with an aggressive solution for those specific areas that we are targeting maybe for things that we feel are one-offs or something we can still import it and cater to them.
The next question is from the line of Kashyap Javeri from Emkay Investment Managers.
I have only one question. When we look at some of the more industrialized or manufacturing-focused countries versus, let's say, an installed base for us which is about 15,000-odd and at industry level maybe about 40,000, 45,000 kind of number, what's the sort of max possible, domestic market maximum possible to do? Is there any benchmark you have for a particular amount of manufacturing GDP -- as many number of printers which are needed eventually and that's going to be the size of the domestic market?
Yes. So if I answer that question, I think what we've seen is definitely as the GDP grows, GDP per capita, because of increased automation requirements and also because of the presence of organized packaging and even the substitution of a lot of other types of networks in the industry side, the number of printers per person definitely increases and will result in consumables and so on. So it is there, but it is on a declining curve. It is on a declining curve.
So what happens it increases faster, like I said in some previous calls to about, say, $5,000 per capita. It's at a faster rate. And then beyond that, it starts increasing at a slower rate. So I think the -- I mean -- and it's very difficult to compare. But if you look at a market like China, say, their domestic market would be like at least 5, 6x, if not more. So in terms of the number of printers, the CIJ printer that they sell per years more than 30,000, whereas we sell like in about 8,000 to 10,000. That's one type of printers. We also have like a bigger market for all the other types of printers and because of these has been growing at a large base for years now. So -- yes, as a result.
So I think, yes, you have to look at it, that India is still -- I mean the Indian market will be like about -- about 200 million dollars, euros or whatever you give it right now, and the worldwide market would be about $5 million to $6 billion. So I think it's going to depend on India's share of the world GDP. And of course, as the GDP of the world grows, this market will continue growing. So it's difficult to say.
But as long as -- and we saw that -- like some person asked also that IIP has not grown so much, but you have still grown, I think a little bit earlier question, I apologize I haven't remember who asked it. And Rahul did say that we continue to sell printers. And that's also because there's a shift from unorganized packaging to organized packaging. So for a lot of people like us, I said, so there was edible oil, there was sugar that was salt, there was wheat, there was rice, even milk, a lot of things are not packaged in India or the percentage of packaging was quite less. And now a lot of those products are being packaged. So that's causing a secondary increase in sales.
And then as people are getting more convenient, people are starting to buy like 20-kilo bags of rice, start wanting to get buy 1 or 2 kilos at a time rather than opening a 20-kilo bag and then hoarding it into jars and so on. And that's what we see more pre-cooked stuff, more varieties and -- that will increase the amount of packaging. Maybe not very good from a sustainability viewpoint, but that's what we've seen elsewhere in the world.
So even if you look at bottled water, people used to only use it when traveling or certainly small things before. Now if you -- someone comes to office for a meeting, which might see all of you have like those little bottles all over the place. And so that's increasing the consumption also. So all these factors were also guiding the market. It's not just the GDP growth thing. But it's related because as GDP growth for capital increases, all of these other factors continues to increase.
Right. And just one more question I want to ask over here, you mentioned that installed base today -- sorry, at the end of FY '22 was about 15,000 printers. That amounts to almost about INR 140,000 a printer per annum of consumables and services based on the annual report data, which is already available. That number, if I go back about 4, 5 years ago, was roughly about INR 160,000 or INR 155,000 a printer. So what has changed between then and now that this consumable per printer of installed base and services has -- or services and spares also is not growing at all or rather it's probably declining? First, are these numbers correct? Because I've taken it from your annual report. And point number two, if that's the case then...
Get these things. I'll answer those questions. So the first thing is, of course, we had a very large cement business previously. And as you know, cement has an off production prior. And then we had a lot of issues with piracy in that market. And we'll go even till date, I'll say the customers that are there have a lot of issues in terms of the quality of printing because they frankly don't care about that, which actually affects our business a lot because the moment of person doesn't care of these meeting statutory requirements or not, then the scope for Control Print and Domino and we do get decreases because when you need to take anyone.
So that -- so many business declined quite sharply. Rahul will give you the numbers right after this. And that sort of affected the printer business quite a lot because the cement business definitely used to have like in excess of about INR 300,000 or INR 3 lakh per printer per year in terms of consumption.
And the second factor is that our product mix is continuously evolving. So we sell, for example, a lot of Thermal Inkjet, lot of other stuff. So we also printing lots, for example, in the cartons now. So you are printing, say on, I don't know, some sort of like antiquity whiskey or something. And now there's 24-odd bottles pack in a carton. So we also print on the carton. That's also printer for us. And we like Rahul, didn't give the exact break ups because of different reasons. But they have been included in secondary packaging and the packaging. There may be some people used to print offline at a fast pace and other shift to their printers online. So they're using more printers as a result, but the overall production per printer has decreased.
And so those factors are also affecting the overall consumption per printer. And so it could be -- according to me, this figure might slightly continue decreasing. But what matters is that is the overall trajectory is increasing or not and at what pace because it depends so much on what mix of printers we sell. So for example, tomorrow we sell some printers which the technology comes from MARKPRINT, the consumption for printers of those would be very high. We're talking like in the INR 10 of INR 30 lakhs per annum per printer range. So then that could skew the figures the other way.
So it's very difficult to -- without the granularity, which I realize we don't provide to you at that level, it's very difficult to take a very broad prediction and look at it. So it's not a very relevant piece of information is what I would say. We look at the number of printers and the total base because we don't know what mix of printers is being sold. It's usually to understand how that business is performing. That's my own personal viewpoint.
Rahul, do you want to add anything on any of those points?
So that's fine. I think you've already explained them.
The next question is from the line of Yash Bajaj from Lucky Investment Managers.
Am I audible?
Yes.
Yes.
I'm fairly new to this company. So just excuse me in terms of the granular details of the company. I just wanted to understand. So one of the previous participants said that the growth of the volume in our business will be dependent on our customers growing in their respective segment. So can I get like an overview of the kind of mix we have in terms of customers like industry-wide? Like I know that we are in FMCG, alco bev, pharma, textile, but like just a brief breakup of it? And in which respective segment do we -- respective industry are we seeing a higher growth?
So basically, we are mostly skewed towards the industrial side since we were a late entrant compared to our competitors. So for Control Print, about 60% of our revenues were mostly on the industry side and about 40% on the packaging. That's the breakup we've been seeing.
Now that is changing and revise more on the packaging side. So the industrial side is coming towards the 55%, and the packaging is going up to 45%. Over the next few years, that's what we believe will happen because of the new printers that we are launching.
Okay. Okay. And so we offer the printers as well as the consumables for the printers. So is that -- so if a customer buys the printer, he has -- is the consumable to be bought only from Control Printer or like...
Mostly we have RFID chips in our printers. And that's what the customer needs to purchase the consumables from us. Some people do try using [indiscernible] consumables if they managed to bypass some way the RFID software. Then in that case, we don't service the printers because the [indiscernible] actually spoils some of the parts, and the customers then have to get the servicing done from outside.
So in many a cases, we found that where customers move out of Control Print over a period of time, their printer deteriorate and they have again come back and started buying from us. So these are things which do happen in the industry. But apart from that, 85% of the industry is still organized. It is 10%, 15% where these activities take place.
Okay. Okay. And in terms of margins, how different would be the margin for a printer and a consumable?
So definitely printers are at rock-bottom price, has very little margin, and it's a very competitive price market there. The reason being that the move needs higher profit capacities on the consumables, and that is what sells for multiple years after you sold a printer. So one printer can give you, let's say, 5 to 7 years of consumable business and -- which is high-profit margin. So that's the reason why printers, at least in India, we found is at a very low price compared to our -- other countries. And yes, the profitability mostly lies in the consumable.
Got it. Got it. And just one last question. In terms of printers, what is the difference between a CIJ and a TIJ? What's the difference?
Difference between?
CIJ and TIJ, if I heard it right on the call.
So they're different varieties of -- we have about 7 different types of printers. CIJ and TIJ are just 2 out of the 7. And they're different on different substrates. TIJ is more specific to certain applications, whereas CIJ is more general and can print across more industries and substrates. But maybe on the website, you can get much more information on, just go through.
The next question is from the line of V.P. Rajesh from Banyan Capital Advisors.
Congratulations. Just a question on the acquisition that we did in Netherlands. If you can share the financial metrics, revenue, EBITDA or PAT for last financial year, what does it look like?
Yes. We had put that up on the stock exchange once we had given the -- it's available for the last 3 years.
Okay. Okay. Sure. I'll take a look at that. My second question is just on the macro side...
[indiscernible] in revenue and [ INR 150,000 ] in profit, I think. So you can -- but with that number, if you just write into us.
Yes, no problem. So my other question was on the macro side. Are you seeing an acceleration in the industrial activity or in the packaging activity? And therefore, what is the prognosis? Because everybody seems to be talking about a slowdown, which will also impact India. So I was just trying to understand from your vantage point, what you are seeing.
I didn't hear the question clearly, Shiva, can you please answer that?
I don't understand the question clearly also. If you could just repeat it once again.
Sure. So what I'm trying to understand is, you are very much plugged to the industrial side of the economy. So as you are out there at the ground level, are you seeing the industrial activity pick up, let's say, 1 month ago or 3 months ago? And are there certain pockets where it is growing faster than the other pockets? Do you see it from the sale of your printers or from the increased use of consumables?
So from the industrial side, we actually felt it was a bit slow, honestly this Q1. It was slower than what we expected. But I mean I'm not some -- we don't have like macroeconomic trends, but overall activity was a bit subdued.
Okay. And was it concentrated in a particular industry that you supply to? Or was it across all the segments that you cater to?
I think the 2, 3 segments like the pipes, to a less extent the -- I mean the construction material industry is still okay. I think the pipe especially was a bit weak, and to some extent, the cable and wire. So we'll have to back down because the pipes that we print on are not used in agriculture so much. They're used more in construction.
And then in the FMCG was okay. It wasn't very increasing really that much per printer the consumables business. And it wasn't decreasing also. It was sort of flattish. So...
Overall, I think we believe that another 10%, 15% definitely the volumes can increase compared to the current level.
Over what period? This quarter or for the rest of this year?
So going forward, I think things should increase more in the production of the different industries increase.
Maybe there was -- maybe there's a sluggish or maybe there's some destocking, obviously. Sometimes it happens. So I guess we'll move a better product for these figures for the next 3 quarters. That's you.
Also, Shiva, on the raw material side, some industries was doubling. So we know that some printers were shut because their production lines were not operating because they could not manage their raw materials. So different reasons has kept it low.
The next question is from the line of Anurag Patil from Roha Asset Managers.
Sir, any kind of a supply chain disruption we're anticipating in the coming quarters?
I think right now, we are in a supply in disruption and our printer production has been affected. I think I did based on the poles in the Q4 conference call, where I said we were severely impacted. And that's why our revenues are lower this quarter because we've not been able to sell many printers because we don't have the components. I said that -- so you're purchasing from the spot market, whatever we have to fulfill our needs at a much higher price. It's affecting us almost to the tune of INR 30,000 to INR 40,000 a printer. But even then we want -- we need the printers because there's still some parts missing.
So the orders are to buy however it is -- wherever it's available, however it's available once we authenticate the -- validate authenticity of the component. So that's the situation right now. And because of that, we've been able to produce the CIJ printers during Q1 except for some old [indiscernible], some old stuff that we've been changing around and that we will be softer stocks and stuff, which we normally keep us a very big safety for the printers to manufacture certain printers.
But now our production is starting of the new generation of printer. And hopefully, we'll be able to get out of the situation in this quarter at a price because it's -- we're just buying stuff at a much higher price. So I think this is going to continue for the next 6 months is whatever we've seen and as we've created some stock at a pretty high price. So that's what the situation is, but we have no choice.
So the semiconductor -- I think the semiconductor market shortage is improving. We also see some other where components of others like rubbers or certain basic lead times have increased tremendously. So there's -- the whole supply chain is a bit broken. It's not recovered, frankly, properly from the COVID time. And definitely, we are more than anything affected because we don't have the electronic components, be able to manufacture our PCBs, which the electronics, to drive electronics for our printers.
So because we don't have -- like there's like we'll be like, I mean, 300 bulbs on a PCB, so if we miss one we can't make it and can't redesign it and for every alterative component, you have to validate it, and then some of them require software, they programs -- this whole thing will become a disaster. But so basically those really help, which helped us to purchase from the spot market at a very high price. And in some cases, we have redesigned, in some cases, we have used old products but what we're doing there expect the situation to continue to be difficult for at least 6 months.
Sir, a lot of raw material costs are now correcting. So current gross margins of 60%, can you say that will sustain going forward?
I don't know exactly on that but when I would think like in this quarter, the printer revenue has been subdued, it would not add to our profit normally, but it would not reduce our profit, normally we sell them at a flat level. So then we don't cause a loss nor there was profit. Over right now, maybe we're selling them at a bit of a loss going forward because our cost has increased because we have to purchase from the spot market.
But so I think that -- the absolute numbers might matter a little bit more than this quarter-to-quarter comparison, especially because we've seen so much fluctuation going on like last year, but Q1 is affected because of COVID, this year, Q1 is effected because semiconductor shortages, something or the other seems to be going on, honestly, since like March 2020 or something. So it's very difficult to get a comparison it would then fast forward of this event Q4 everything went quite smoothly.
My question was more on the consumable side. If the raw materials for the consumables are correcting. And is there any scope for further improvement in our margins?
I think currently, some of the prices are on a higher side, but if global situation stabilizes, we do have a scope of improvement in some of the raw material or for consumables. So yes, definitely, there is a chance that things are better. This year, we are not sure because we still -- the market feedback that we are getting is that the prices will remain on the higher side. Maybe the next year, if it stabilizes, we have scope of better margins on that.
The next question is from the line of [Harish Birya ] Individual Investor.
I noticed in the presentation that the field staff has reduced to 300 from 360 earlier. Is the reading right? Is there a reduction in the count of field staff?
Sorry, could you repeat what is reduced?
Field staff. So the number of field staff deployed. I think it's reduced to 300+. And earlier in the presentation, it was mentioned as 360. So has there been a reduction?
To be honest, I still not understood. Could you speak a little louder?
He is saying, Rahul, is the field staff reduced? Although I didn't get completely, sorry. Okay. So some sort of breakup in the presentation, where the field staff was 360 earlier and now it's 300. But I mean I don't know offhand the numbers, but nothing is reduced because if is anything is like...
Where are you getting those numbers from, exactly?
It's from the presentation. Earlier, it was mentioned that 360, now is mentioned as 300 plus. So that's my question.
And I guess, Just the form of presentation point of view. I guess they change some presentation outlook. But like Mr. Shiva said, the field staff has not reduced, and we're looking to add a few more because the business seems to be growing quite strong. So yes, there is no reduction probably just a presentation format.
Perfect. My second question is about your track and trade services, how is this business structured? And what is the kind of software team that you need to provide this service?
Shiva, the track and trade, if you can explain?
Yes, so I was on mute, so sorry about that. So normally what I think you see we normally print like something simple on the products like a date code, batch code and so on, MRPs very good information. Now in the track and trade system it's an integrated system. So it's not just about us printing the standard information. Along with that, what we do is we have to generate a variable QR code. Now for that, what we do is we have to download some data from the customer's ERP system. And at the same time, we add some software, which then generates certain random numbers, there's a format provided by the GSI organization, this is Global Standards one, and they issued the standards for this -- as for the EAN and barcode and so on. So we use that to print variable information on the products.
So we use that to print variable information on the products. And then what we have to do with the uploaded back from our printer and eliminate in our printer because we can't store more than 1 code at a time. And it goes back into those customers host customers business. But at the same time, resident scan the same with our camera, scan the barcode ensure that the print has been there, when it gets validated as those part of it available and it has been printed -- and then we have to eliminate it from our database, it goes somewhere in the cloud or where the customer wants to be stored.
And then when someone want -- and at the same time, with some codes incorrect, we have a rejection mechanism which we have to build on the line. So that without stopping this production, if the code is not being great, then that product is removed from the production line, which, of course, can be challenged in resolving speed. And then all of that information is then connected.
So when we see product manufacture -- secondary carton -- in the secondary carton, the core of all the primary cartons is also included in that. So suppose I have, like, say, for example, 10 blisters and I pack it in a blister pack in a little folding carton, then all the data of -- variable rate of almost 10 blister packs, which is then that secondary pack will then -- that data will be encoded so it will come on a secondary pack.
And when you see then also in secondary packs, goes in a tertiary pack, say carton which then get shipped out to distributors. Then on the tertiary pack, it contains the information of which 10 secondary packs are there and which 100 primary blister packs are out there. And each of them are rejection mechanism, the reason is we then uploaded somewhere on the cloud or the customer's data, the industries choice how he want to handle it.
And sometimes some people use it for -- where we help them you might use it for validation within SMS, the authenticity of product, or they might use it for their own internal stuff to validate some product or they might use it also for the marketing reasons so that they can use it to scan this code and get INR 10 off or something like that, we get a 20% discount in the next purchase.
So then what happens is basically, that's a different from us providing a product because -- and just printing out a date code and batch code and leasing because the amount of involvement of ours and the time we're packing it to provide is much bigger so it's much more challenging. And it's, of course, a much higher revenue generator and then ,yes, there is certain software which you have to manage and we also charge some money for that.
Okay. So this sounds like a slightly complicated service. So the revenues that comes from this segment would be categorized in the services segment in the revenue breakup?
What did you say? What?
So the revenue that you will be generating from this traffic phase would be categorized in the services segment in the revenue segment of your annual report?
Yes. So right now, it's quite negligible overall because when we sell the equipment, it will come under a sale of equipment or consumer, depending on what category comes under, but the repeat service revenue, I mean I think, Rahul will be probably technically better to answer this question. And it will come on the sale of services or something like of that sort.
[Operator Instructions] Next question is from the line of Saket Kapoor from Kapoor & Company.
Sir, firstly, coming to the acquisition part. So this payment is made to the promoters or there is a stress capital has been raised in the company for growth of the sale?
The initial payout will be to the current CEO there, who is the promoter. And he will continue in the company for the next 5 years. We have management contract with them.
Okay. And the balance 25% is also held by him only?
This promoting strategy. Actually the current CEO has a partner, a nonactive partner and we're purchasing that partner out entirely. And from the current CEO, we will be purchasing a part of its shares just so that it's clear.
No, the balance will be held -- a 25% balance share will be held by whom, sir?
Balance will be held by the managing partner. And our share purchase agreement says that every year, we will continue to buy 5% of his balance. And by the end of fifth year, Control Print will have 100% of the equity.
And about the valuation part, sir, at what value are we buying? Is there any clause of incremental valuation we are going to pay or any other yardstick that will apply?
No, it is because as the RBI guideline, it has to be valued every year as per the category one merchant banker. So at that point of time, it will be revalued. So we have some indication on what the pricing will be.
And sir, this company was formed in 2015. So what is their current installed base and the sole purpose is the technology part, which we want to get enabled in our printers going forward. That is the main -- the factor behind it, sir? And what is the installed base as of now?
Shiva, can you take that?
yes, I think I sort of answered this question earlier, but if you can just repeat yourself, Saketji?
Yes, sir. I was looking for the installed base of printers for Markprint. That this company was formed in 2015. So this is only 7 years, 6 years old. So what is their current base and the sole purpose for us is the technology transferred? And then post this 100% acquisition, do they have any technology partner for which we have to pay any royalty going forward?
So it's their own technology. They -- and I explained it earlier, I think in the same con call today, so our primary purpose is to acquire the technology for our own -- for the top end of our range. Secondly, Markprint own installed base is about 300 printers, if I remember, between 300 and 400, but if you want the exact number, I'll have to check, but it's between this numbers. It's about 300, if I remember correctly. And the third thing was -- yes, of course, we are also expecting Markprint to grow. So marketing and sale are about EUR 1.5 million approx, if I remember right. And we're expecting that to almost, let's say to double also in the next 2 to 3 years and continuing to grow at a faster rate because of our support to them. And their own, the cost factor, they've got an existing base in their products, and this is a time for them also to be able to go faster than before.
Saket, their business model is slightly different. They also make a good amount of margins on the printer apart from the consumables post. So it's not only on consumables that they make the margin. It's also on printer sales because the technology is very high end.
Okay. Because the installed base of 300 only definitely, you must have done your due diligence, but the base -- installed base that means they are very new to the market. if their understanding 300 printers is there.
This product, it's not something that is sold like [indiscernible] it's a high-end niche products.
Yes. So I think the cheapest printer would be like EUR 15,000 discounted, like the cheapest, like in the most entry level. The average ticket size is much higher than us. So you cannot compare the 2 because if you -- I mean if I'm selling hatchbacks and I'm selling...
What should be the market share then, sir? On a base of 300? And since India the niche segment.
Yes.
What should be the current market share in the market in which they operate?
I don't know the market share because it's the unrefining market. We are creating a new market in these segments, because people...
Very few players are...
So there's no market share in this. There's -- it's almost like a new market.
[Foreign Language]. When we look at the -- again, the below line item, this time, this time we find a negative line item of INR 8.66 crores equity investment through the OTI route. So what is the current size of the book, sir? And how are we going to conclude this transaction from the cash flow or any borrowing? Or how is this going to conclude?
We already have funds in liquid funds, which we are integrating. So it will completely be internal accruals.
And size of the book, sir, we have a negative line item of INR 8.66 crores in a quarter. June was a bad quarter for the capital...
Because the markets are very volatile right now. Probably by September, you'll get to know, once it is out, the balance sheet, then you'll get to -- right now, it's not in public review.
[Foreign Language] about the buyback part and a special dividend payout, which Shiva sir and Rahulji, you people were telling that Board will take the decision at the appropriate time. So now with 1 acquisition -- 2 acquisitions happening over a period of 1 year, another with very small innovative and now with Markprint. So going forward, what is the thought process of the management in distributing the cash back towards investors since I think so we are at the cusp of the inflection point, if from my understanding of the total conversation and the numbers goes.
So this should be -- we should build one from these numbers since this is the first quarter only. So just a thought process of how things are looking up and also on the utilization levels for the consumable part, I think they were in the lower 40s for us. So how are they -- have they improved? that's the small point, sir.
Saketji, I'll just take your questions one at a time, if that's okay.
[Foreign Language]
So what -- just building back, of course, and I appreciate first your coming into the AGM call and putting those questions there, will be definitely appreciated, with shareholders are involved and actively, obviously ensuring that you're giving a suggestion to grow. So I want to say now our thing is quite clear, which is that we have decided on approximately INR 50 crores of cash and INR 50 crores of bank in regards of any opportunities that come. It's not so much of [indiscernible] because in our business, unless something really bad happens because there's a repeat consumables business.
We don't see any real liquidity issues. Of course, even something like COVID happened and the lockdown happened so even we can't say anything 100%, but it was more in case of an opportunity to expand that terms. I will say again with you, we are in a space where we are -- there is customer demands from us from our integrated solutions, which I think ,Harish asked earlier, so I'm thinking about the track and trade, and I try to give a basic idea of the system to him and to the other investors. So -- but there are more requirements like this coming from customers. It's not only on track and trades, it could be for certain branding, it could be for certain [indiscernible], it could be certain other requirements.
The second is -- so we are, obviously, trying to get ourselves to provide that. So it will be based around up winter, of course, but it could be a bigger solution, not just the printer itself. The second part is that we are looking -- getting more into more sophisticated types of printers, which is something that where the Markprint acquisition was obviously one where we started.
The ICI has been working -- a bit more optimistic because it was the right person who we knew from the market, it was a brand extension. It's using our distinct factories and facilities and technology. So the cost involvement for us is very marginal. And what I think is a sustainable pattern is another area that we would be interested in going forward. So I think it's also going to be good growth levers to be taking us in the coding and marking business, which is a growing and are full focused on it to the next level of growth as a company. But more than that getting back to your original -- so these are the areas where we are focused on investment and we are keeping some liquidity available for opportunities that come in these areas.
The thing is -- I think -- and the board has been clear, and I can say this on behalf of the Board that we have provided dividends in the past, but if the amount of cash that is available in our company goes beyond a certain point when the Board and we don't find -- of course priorities to invest in these growth areas in our existing business. Our existing business, as we discussed before, doesn't need funds. Whatever the depreciation amounts are right now is more than enough to cover the CapEx requirement for at least the next 2, 3 years. So it does not require any capital investment. That's the first point.
The second point is that we will be looking out because we are more interesting inorganic bolt-on acquisitions rather than developing capabilities from scratch in our company, for certain areas of the things digital printing definitely we'll be working on ourselves. But for other things, we'll be very interested in strategic investments to increase our capabilities. And that's one area where we are keeping this INR 50 crores, INR 60 crores cash and INR 50 crores, INR 60 crore bank payments available for.
But whatever is beyond that, we will provide back to the shareholders of either whatever the Board decides is tax efficient, I'm not saying there will be a buyback or something. That's the board's call. So we will not hold on to cash beyond that amount as there's nothing immediately visible on our plate. So I can give this assurance to all the investors that we're not just going to build up the cash balance in the industry. If there's no reason to deploy them effectively, then we don't have urgent solid output for that. So that's my -- I think you brought that up in the AGM. I don't know if that was answered very clearly, but I have -- it has been discussed at the board like before, and I can give this answer on the half of them.
Right, sir. And on the consumables front? Any numbers you want to give? Utilization for the consumable.
Can you repeat that again, please?
Yes. Yes, sir. The utilization levels of consumables for us, they were in the lower 40s, I think 40 or in the 50 bracket. So with now the installed base crossing 15,000 and what the first quarter numbers reflect about the percentage mix of revenue at 56 for consumable, how are the utilizing levels looking currently? And what should they look like for the end of this year, sir?
We're still in that 50% to 60% rate packages. I don't think it will be very stressful in terms of capacity utilization.
Yes, I think we should be okay till we reach about INR 300 crores, INR 350 crores what we be listing -- at that point in time, you might have to increase our raw material storage facility in Guwahati, in that also we are -- it'll cost a few crores, but not like a huge investment. But it's just a storage facility. We have enough production facility. We need to have more storage facility for the raw materials and the finished goods at that point of time or we will need to set up some more warehouses outside of Guwahati, so then we can ship the finish goods out. But that would all be taken maybe another 1.5 years. So when we hit -- if we hit leading 12 months of 300, 300-plus in that point of time, maybe we will built this conversation.
As of now, only from operation point of view, we can increase shift a few hours to gain some extra capacity. So that will not be a bottleneck at this point in time.
And 300 top line should be our target for FY'23, given what the sentiments are currently and the utilization levels at your customers base. We should look forward to scale our revenue, sir.
I think that ballpark number should ideally be well baked into our numbers for this year.
Yes, I think we are internally also, we are targeting close to that number.
And all the best to the team, sir, for a very conclusive discussion over and we look forward for further interaction with the team, sir. All the best.
Moderator, can we wrap up the call, if there are no more questions? Hello. Karan, you are there?
Yes, I'm there. Rutuja, where are you?
Are there other more questions available?
Yes, we have two more questions.
[Operator Instructions] The next question is from the line of Devanshu Sampat from Yes Securities.
Just one question from my end. So you just mentioned on how the model is different for the company which is acquired, right, versus what it is in India. So while that company makes money on printers and that's not really the case over here. So just wanted to understand how is it globally for the coding and marketing business, especially in -- I mean if there's some sense on developed and emerging markets, both.
And why are they so different over here because the sector is highly consolidated, right? We have 80%, 85% share coming in from the top 4 guys, so is it the new challenges beyond the top 4 that is leading to this? Or is it just the intensity between the top 4 players that is leading to us giving printers at cost or something. And you think this is just a shift phase right now of giving away printers for essentially free or you think it's a temporary phase?
Yes, just getting to your questions. I think that first of all, obviously, the pricing discipline in the Europe or the developed market is much, much higher than in India. There's no doubt about that. So the way customers evaluate products is also very different. So India, there's a direct cost comparison. I can't explain simply, but we would just say that this cost INR 10 per kilometer that cost INR 8 per kilometer, and then you didn't want to direct cost comparison of the 15 versus the something. Abroad, people are very much concerned about the cost of labor, they are concern about the cost of automation, some of the ease of use and the reliability factor, which helps us sell in India, and that's why the market is dominated by the 4 of ours because of the underlying concern of reliability, but abroad they measure the cost of reliability also.
So abroad, the person will say that if I go to some local guys or some Chinese guys or some whatever person who support might be less. And at least 1 day say extra production as a result. What is the cost of my line being down for 1 day? And then that cost is normally 20x higher than the printer cost, right? Because you lose production, you have employees out there who can't operate. You have all the other fixed expenses, but most importantly, if you need that capacity and you're able to service your market, then that's also a massive issue.
So because of that reason, the way people measure, we think abroad is very different. In India, people have very shallow way of thinking at certain times. And I'm trying to put it as a bad way as well as great. But we will not look at it these issues. So it's a very cultural single in terms of quality of certain thing. You have to look at branding. You cannot look at doing something. And given a short-term result, this is something that you build up over a 10 -- 5-, 10-, 15-, 20-year period, that's how you build your brand, your quality, your reputation, your service and so on.
So I think that's an issue that we get in India. So it's just the way for people to focus on expanding the market was to improve or sell cheaper which method of telling. So it's definitely a management call that happens. It's also an industry-wide thing. So it's very difficult for one person to control it in the situation. Of course it stabilized in the last few years because of like -- I think, Rahul has mentioned we are all largely [indiscernible] and that's the situation. But definitely, our view is that in newer printers like in the Markprint situation and those types of printers and we're selling them in India. We are not going to sell them in -- obviously might not make the same type of margins as Markprint, but as we go higher up the value chain. There is no reason for us to discount the printers to the cost level.
And we should make a certain amount of money on the printers. But in existing printers, which are already in the market it's very difficult for us to change that situation. So that's where the story is right now. Of course it's looking worse because since the COVID time, there have been some cost increases on us [indiscernible] trade or shipping or logistics disruption, and now this whole semiconductors. I mean the component issue [indiscernible] issue that were [indiscernible].
So no, I understand that, but I'm just trying to ask that is it possible that this can get more aggressive going ahead, like you may have to not even sell at cost, but just give them away free and then hope for business coming in based on that? Or that will be too [indiscernible]. Can you hear me?
Yes, I'm here. I did not cut off, I believe.
Sir, I was asking, do you think is it possible for this to get a bit more aggressive from the players in the sense of giving away printers basically for free and then hoping for business to coming out as compared to just recovering the cost right now. Is that a direction the industry could possibly moving or is that unlikely?
I don't think we have any intention of lowering prices. I mean that's the Control Print view point, but I don't know -- I mean, obviously, wherever the challenger will be more aggressive as well as an incumbent will be -- is relatively not going to be aggressive because we're just people. But in general, we have pretty much no intention of lowering of printer prices for -- is there anything you want to go the other way, or we might be more focused on the newer models where we increase prices there rather than on existing models that we increase prices.
The next question we have is from the line of [indiscernible] an individual Investor.
You're able to hear me?
Yes, if you can just speak a little louder.
Okay, sir. Now I have only one question regarding our equity investments. I know this has been raised many times in the past calls. And the response from the management was that, it will be liquidated at an appropriate time. But if I see even in this year's annual report, we have even, like instead of not liquidating, they've initiated newer positions in some scripts. So what is the rationale behind this? And how -- what is the way forward for this?
Yes. I think I just answered this question quite extensively or [indiscernible] if I remember correctly and Saketji has asked this question and you asked this question at the AGM so and the Board will discuss. So like I said, we are not -- this is -- when we talk about INR 50 crores, INR 60 crores amount, we're keeping that at a permanent amount, okay, 4 fire power in case we need it for anything. So in that case we're not looking at -- and you don't believe in [indiscernible] use it as an emergency for our own requirement [indiscernible] are some banks on it, Rahul, he can give you some more details on that, but the basic focus is that we need a certain amount, we're keeping that beyond that amount, like I said, we don't have a specific and a very clear idea of how to invest it.
Our first focus is to reinvest into areas where we feel that we can contribute to our country and also make sure that it's a reasonably successful business. And I've outlined those areas very clearly, which is to integrated solutions, not only track and trades, but similar. The second is, I said that we will be focusing on digital printing. And that area we will look into one acquisition out there, is what I said was that we will be focusing on sustainable packages solutions. Because we feel that that's something that can call for our country to move forward because this is a big area of concern.
And it's something that we believe in again, we would like to integrate our printers as part of that solution. These are 3 areas we're focusing on, fourthly, I said that our existing business for the next 2 to 3 years would require marginal amount of investment, and we should be able to cover the amount of investment for the coding and marketing business through the depreciation amount, so net CapEx will be approximately zero. I did say that for the -- we are, of course, investing in our R&D, but increase expense over the point of time. So that bill for us is continuously increasing, but beyond that, I said that whatever amount we have beyond that, and it could change. I could always request the Board for a higher amount, if i feel I need to make bigger acquisitions, but the focus is more on acquiring technology, acquiring capabilities.
And we don't want to shift our resources because our focus, our knowledge is around printers. Even though we're in the packaging industry, we don't know how to make packaging machinery, for example, our focus -- we know how to make printers. We are going to obviously increase our capabilities of manufacturing digital printers of higher levels as for different requirements that we're targeting, but not so much -- we don't want to get beyond our own competency because it's very difficult. It takes a lot of time to acquire that experience, to make a very high-quality, reliable product versus a product that has all the technical specifications, but isn't that reliable on the line.
And we've made such some mistakes in the past, and I don't want to do that. So once we invest in all these areas, I was clear that our request to the Board for an amount of INR 50 crores, if we've got in liquidity and INR 50 crores as a bank limit. And beyond that amount, we will revolve back to the shareholders. And like I said, because you were looking at this as a multiyear thing that we always keep this amount, because you might increase it, you might decrease it, and that's something I will discuss every year, depending on what I foresee as the requirements along with our team or whatever goals are for the next 1 to 2 years.
And whatever is beyond that, I -- we will reward the shareholders or we will give it back. Even if we reinvest it, it is a reward for the shareholders, it's coming more in the form of increased growth over a longer period of time. So like I said, of course priorities to invest the money in these allied areas of businesses which we want to grow. If we can find the right type of opportunity, if we're unable to do it and the cash balance increases, then we will be giving it back to the shareholders in whichever form the Board decides could be tax efficient in that given situation.
So that's a situation again where it comes to equities or liquid funds or something as of course, there's a difference in the rates between the 2, we are looking as a continuous holding period over a 3-year period. So a short fluctuation over a quarter or up or down honestly doesn't affect us so much. But we have taken this note that people are concerned about that, and that's something we need to internally discuss and get back to you guys on.
But it's not something that we are investing or we're concerned about quarterly fluctuations up or down. It's not that relevant to us because we're looking at more as a sort of something that we keep in reserve because if we get an option to take INR 100 crores to INR 200 crores acquisition, we still have this money available to us. So I'm just want to explain it because I know this question has been raised many times, and I've given a very long answer and I have answered this like 3 times, but I hope that it's very clear because I know this is an area of concern that a few people have raised. I just wanted to address that.
Okay. Sir, just to add a point here. Sir, like if -- we understand that the business has to reinvest and like most of the investors are happy if the company is looking out for acquisitions. And if it's a bit bigger acquisition, we need to keep cash on books, which is well and good. The concern from most of the investors is that it has been invested into equity instead of some fixed income instruments. That is the concern. The concern is not the cash balance, it's that the cash balance is invested. If the management can come out and provide more clarity on the way forward in the next meeting or by the way of action saying that we will be investing in certain areas and will not be investing in certain areas, it will be very clear to financial investor shareholders, sir. Because many are actually like you, sir, many are actually concerned by this with the way the capital are being or kept into liquid investments.
So again, I'm going to answer this question, which I hope I just answered, but if you all understand exactly what I said, I said we need a certain amount of cash, but in the form equities, in the form of funds, in the form of liquid funds to me doesn't matter. Like I said, the certain thing is, the view is that these funds will always be there. So even if we spend it in a given quarter, if we will then reduce maybe certain other ways because they're generating cash continuously to always keep certain funds available for the business needs. So we are less concerned with the quarterly up or down. Obviously, there was maybe a view, so there is a significant variation in what we are getting over equity and we've been investing or had some equity investments since at least 2005 since I joined. Again, it's not something I look at, but the overall rate of return since 2005 to 2022 when we've calculated has been over 15% post tax. So I'm talking about over a 15-year period over taxes and dividends -- I mean, appreciation and so on.
Whereas, obviously, the liquid fund is slightly different, so I understand why investors are saying that with your core competency in your business and so on, and we appreciate that. Kabraji and the Board have taken a note. And that's why I am being very clear about the limits of what we will be employing as cash in whichever form and keeping it and what we will do with the amounts which are extra. So we're not planning to turn into an investment house. We are a proper business. This is -- we do a very important service for what we believe for our customers, for the wider new consumer, means -- I mean obviously, that's where our focus is, and we have some areas of growth clearly outlined.
So I just want to be quite clear about that. So it's not like we're not taking this, and I understand this is a concern. But of course, there could be multiple viewpoints, which is the viewpoint of Mr. Kabra and the Board, like I said, was that this is a rate of return we're generating overall 15-, 17-year period or whatever that 2005 to 2022 is versus what we're getting in a liquid fund after tax is different. And if we don't need the money for something very weak, it could be that if there's something on the line, which is what the viewpoint of Mr. Kabra was, that you have something on the line. And I know I need this money 6 months because you're working actively on something like a Markprint, then I will keep that money in the liquid fund.
And for example, right now, we have more than INR 20 crores in liquid fund because you know we have to pay out the dividend and the Markprint acquisition, and then we wouldn't invest that money in anything else. So that's what his viewpoint is. But I am going to send this information back to the board, again, and I will -- I mean, of course, the next discussion will probably happened in the September results now. But I will definitely -- I'll take this viewpoint, and I will pass message on to them. But again, I just want you to understand that what Rahul and [indiscernible] company. We don't make all decisions, my request is to be able to keep a certain amount of money available for strategic reasons that might come up. And that's what the Board has done. And so that's more of the operations part of it. And so this is just what I wanted to convey to you.
Okay, sir. Okay, sir. We appreciate it. And congratulations on the good performance and looking forward to another great set of numbers in the next quarter.
The next question is from the line of Karan Bhatelia from Asian Market Securities.
So what CapEx are we looking for '23, '24, to say so. Given the current and date of sale of printers and consumables?
Karan, could you repeat? It wasn't clear. You talk about CapEx.
Yes.
You said the CapEx will be approximately the same as -- the net CapEx will be above margin or zero, the net CapEx, we always do some maintenance, we always keep improving. But right now, specifically, there's more new facilities needed in the next 1 or 2 years, I think I believe.
Right. And is it correct to assume that all the price hikes have been taken to cover for the past cost inflation? or we yet to see some more round of price increase?
So. We're looking at further price increases. The thing is, Karan, we switching to a new model of printer. We have built the next price increase in the new model. But right now, honestly, we actually don't have printers. So we are like in a bit of a bad footing in front of our customers right now because we are quite behind a lot of printer orders and we're juggling from one place to the other to just meet the requirements.
And we might even have lost some business because we've not been able to service customers, who have very immediate requirements. So we are just trying to get out of the production issue right now. And then that's sort of made where all the energy has gone right now for us. Maybe once we get out of the situation, we'll be able to take a better look at the next thing. But right now, the focus is just getting our production back on track.
Yes. Any closing remarks you want to make? Thanks for the very detailed con call, Rahul and Shiva.
Thanks, Karan. I just want to mention, of course, I think you all would have got stoppage chain notification that Rahul is leaving Control Print after a long time. And for me, personally it has been a real pleasure to work with him and I think he's grown along. The company is grown a lot under him and most importantly, all the employees, the team have really benefited from his presence. And I really wish him all the very best and all my thanks to him for being such a great guide and a great friend throughout this period.
There is -- we have hired Mr. Jaideep Barve as -- and Jaideep you can say hi to everyone, please and introduce yourself. And Jaideep will be taking over from Rahul from first of August. And we have Jaideep from a lot of experience. And definitely, you can interact with Jaideep for sure as you previously did with Rahul at any given point of time.
I know it's been really, really long con calls every quarter, and I try to keep myself away before this in the AGM always for any questions that might come up. So maybe I just want to thank Rahul for all the support, all the stuffs that he has done. And for not only on my behalf, personally, but for being [indiscernible] company and especially his team, everyone has really grown under his leadership. Thanks to all. And anything that you want to add to this or something.
We didn't have Mr. Rahul connected.
Okay. Okay. Okay. Thanks participants for your visit to call. With this, we will concluding the call.
Really appreciate the time taken by everyone. I actually thought Rahul was there, but thank you, everyone, for taking that much time. It was a little bit of a long call, but I really appreciate it.
Thanks, Shiva. Bye. Take care.
On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.