Control Print Ltd

NSE:CONTROLPR

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 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 expections, 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.

[Karan Bhatelia, analyst]

Ladies gentlemen, good afternoon, and welcome all to the Control Print Limited 1Q 2025 Earnings Conference Call hosted by Asian Market Securities. From the management side, we have Mr. Shiva Kabra, Joint Managing Director and Mr. Jaideep, CFO.

Now I would hand over the call to Jaideep for his opening remarks. Post that, we shall open the floor for Q&A. Thanks, and over to you.

[Jaideep Barve, executive]

Good evening. My name is Jaideep Barve, and I'm the Chief Financial Officer of Control Print Limited. Welcome you to the earnings conference call for the first quarter of the financial year 2024-2025. We appreciate that you have taken out your time from your busy schedule to attend this call. Mr. Shiva Kabra, the Joint Managing Director of Control Print Limited, also joins me on this call. The detailed presentation has already been put up on our website as well as in the Investor Presentation notification on the exchanges for this call.

Let me provide some highlights of the performance of Control Print Limited for the first quarter of FY 24/'25 on the standalone basis. On the standalone basis, the revenue for the first quarter is approximately INR 89 crores. This is a good growth from the corresponding figure of Q1 of last year, which was about INR 80 crores. On comparison with the full year '23/'24, the revenue was INR 324 crores. For us, Pipes, Food, Cement, FMCG and beverages continued to be the top sector. Our performance in Q1 is promising and future [indiscernible] well for the company.

We've created key business verticals approach as part of our sales strategy, which we believe will put better [indiscernible] efforts and achieve greater success for us. The cost of good sold is about 38% of the revenue in the first quarter, we see a marginal decrease as compared to the previous period. However, we can definitely hope for an improvement in reducing this, which occupies buying strategies.

The EBITDA, PBT, PAT and EPS, excluding the exceptional items have grown by 15.34%, 15.42%, 14.55%, 15.96% respectively on a year-on-year basis.

The way forward is the change sales strategy to bigger and key accounts, will definitely increase the revenue and also ensure good quality of it. We look forward to better penetration in the track and trace segment. We will increase [indiscernible] prints by managing our overseas subsidiaries in an efficient way.

Our installed base will be increased focusing on increasing larger market share. The floor is now open for questions.

[Operator]

[Operator Instructions] We'll take our first question from the line of Saket Kapoor from Kapoor Company.

[Saket Kapoor, analyst]

In your presentation, you outlined about global market access and new products and technology introduction. If you could just allude where are we in terms of the -- what are we trying to convey? And it's my first question.

[Shiva Kabra, executive]

Sure, do you want me to take that question, Jaideep?

[Jaideep Barve, executive]

Yes, Shiva. Could you please take it?

[Shiva Kabra, executive]

No. So, thank you, Saket Ji, first for attending the AGM, I think you've put a couple of questions there. We thought we would address [indiscernible] so that it all gets written down and [indiscernible] with all investors. [indiscernible]

So, obviously, the thing is we have been quite clear in past con-calls that the essential market or the natural market, both the rate of the coding and marking business in a place like India, which is about 10% to 12% depending on the GDP growth here about 1.5x, 1.6x GDP. And that's the small growth rate that we would expect in the long term.

And so we said that because of the structure of the company, we have multiple opportunities available to us. Now that we are confident in execution within the Indian market itself, which is obviously the most important market for us, so that's [indiscernible] specific aspects that we were looking at for increased growth, one was to look at setting up coding and marketing in some international markets.

Of course, we had a disaster in Sri Lanka, and that's sort of -- and then COVID was there, so the travel was restricted and that held some stuff up. Now a lot of those plans that was made in the past and you're aware that travel [indiscernible] was also there. So, we had already done some surveys on the other market things. Now we're executing some of those plans to expand in certain other markets, in the Middle East, Africa and Asian countries. So that's part of our strategy. And the idea would be that we can get some amount of growth without really requiring increased resources to that extend.

The second part of the strategy was to get more on the digital printing business. We've purchased Markprint, about 2 something years ago and that has been a bit of a slower integration in that specific regard. But, in the meantime, we have also now in this current year, integrated all the technology than previous year, and we're using some of those technologies in our own printers. The Markprint price tag itself is difficult to sell in India and definitely, Sri Lanka, one of the areas, just overall, I would say is like look at the digital printing market [indiscernible] get beyond the date code, batch codes and your other statutory information.

The third strategy was that we were looking at also the software -- the track and trace and logistic side of the business, and that's something we started [indiscernible] division. We purchased sort of an entire team of another startup, which was the thing and then we invested in that business in the last 2 years, that -- so we are now doing reasonably well, it's picking up. So that's definitely part of our strategy. It's mainly pharmaceutical focus. I would say that like [indiscernible] right now. But obviously, [indiscernible] extending into other sectors over a period of time. So that's the third pillar that we had.

And then the fourth thing, which of course, is the major investment with the V-shapes opportunity that came along. And as you're aware, we purchased I think on March 29th or something. The auction process got completed and we officially purchased. The assets of V-shapes SRL and its run through our own subsidiary, CP Italy SRL. So the packaging mono-dose market where we felt it was a very big market. We've got something innovative and different, but of course, it's going to take time for it to happen.

So I think that if you ask me in terms of strategy, the track and trace is more developed, maybe we should start seeing some good results this year. The digital printing also is going to give us some results in India this year, some work, which we've done internationally to expand the performance of that business in the order of some more sales strength needs to be added, and as far as the packaging business goes, like I said, it's going to take at least 2 more years for us to see that in that type of thing. Even with all the other things we're just building blocks, we're not at the level we want, but yes, we are at least [indiscernible] of the printing business, at a level where they're not going to lose money and we'll at least make profits [indiscernible].

As far as the international expansion goes, it's something that has been a bit slow. And we have to own the right [indiscernible], but that's something also we are working on definitely to see how we can expand and target another different markets of us.

So I think with those two aspects, International part and the packaging business are going to take more time to mature and definitely we should at least see positive results in terms of digital printing aspect in order adds to our existing business in India and elsewhere and similarly with track and trace business. So, I think that [indiscernible] what happens like you said all these four things are separate things, [indiscernible] coexisting business and they will all to increase the longer-term targetable market and to increase our long-term growth rate.

[Saket Kapoor, analyst]

Sir, when we compare our Q1 result, the stand-alone and the consolidated part, there is a cash burn of closer to around INR 4 crores to INR 5 crores. That [indiscernible] for stand-alone is at INR 20.36 crores, whereas for consolidation, it is closer to INR 16 crores.

So what should be our run rate going ahead, taking into account the consolidation, which we just spoke about, the 2 segments, which will start contributing to the bottom line and a single door part of the story and other aspect getting traction going ahead. What should investors strengthening in terms of the variation in the profitability for the stand-alone and consolidated number?

[Shiva Kabra, executive]

It's not difficult -- It's not possible for me to predict [indiscernible] because both the track and trace and the printing, the digital printing aspect, costs, which are going to come -- a lot of risk going to come on our stand-alone results. Because whatever we are selling in India is not in a separate subsidiary. It is directly by Control Print. So it would be reflecting in standalone results, but they are very lumpy type of sales like you get a project for a certain amount of value and then you get nothing for one, two months and then you get something bigger.

And obviously, in the long term, as you sell more, you'll get more [indiscernible] business more [indiscernible] on our printers and of course, you'll get more people [indiscernible] or something. So hopefully, it will result in more stabilized business over a longer period of time. But as far as the consolidated and the stand-alone results and the major difference you see, it's quite simple. It's because in CP Italy, I told we purchased these ships from an auction process. So it's something if you really look at [indiscernible] was the technology set of intellectual property in patents. That's what we [indiscernible].

And we had to restock the company because -- and obviously what we're doing is we've got an investment plan. And this year, we had a EUR 3 million budget for V-shapes. So EUR 1.5 million is the basic cost of having the entire technology development team and all the expenses [indiscernible] running the company. EUR 1.1 million worth of R&D budget that we've allocated out there for this [indiscernible] and then the remaining EUR 500,000 and EUR 600,000 was for the marketing and -- sales and marketing, which we're still implementing [indiscernible] don't have a sales strategy or frankly in place as yet because we are soon to identify the right set of people who started doing that recently.

So, but if you add it up and then you subtract some of the sales that we've made our there, and the revenue [indiscernible] so you see that we made approximately INR 5 crores difference comes entirely from CP Italy. But, so far, for me that part of the strategy, we knew that this was going to happen. It's part of the plan for us to invest in it and to grow that business. And obviously, as far as I think what is going to happen in the other businesses is that they were negative and at least they'll be breakeven or positive in this yield. And the [indiscernible] investment that I see, obviously, like in the end, we're probably going to look at stand-alone [indiscernible] marketing business to generate the cash flows to make sure that everything runs profitably without affecting the overall results.

But again, like I said, this is the planned investment. So we have to go through that phase to grow the business because that's what our target is to make this as the platform. We think it has the same scope if not bigger than what Control is currently doing [indiscernible].

[Saket Kapoor, analyst]

Sir, I missed your last two sentences, black...

[Shiva Kabra, executive]

I said that for us -- I'm just trying to say something that Control Print was built over 35 years. I mean I don't know when I started, I think 1989 or something.

[Saket Kapoor, analyst]

Okay.

[Shiva Kabra, executive]

So this business has come over 35 years to this position. Even if you look at what happened, it took years for the market to be established for it to become -- come to that level, of course, the whole [indiscernible] thing happened, and it restarted. So, what we're trying to do on the packaging business is, we believe the opportunity there, of course, I've said it is a high risk that could be [indiscernible] might not give the opportunity, might not be successful, all these things are there. But what we [indiscernible] find out the answer as to whether this can be a business of similar size and profitability as Control Print, but do that in a 3-, 4-, 5-year period for which we need to put in more money to invest and grow that business fast, because we don't obviously want to build that business over 35-year period.

And anyway, the patterns will expire in 2030 or something like that. So we have to move and create our markets of 2036 before then, and need to dominate that market. So the idea is that we want to create a platform in the packaging machinery business around the patented IP that we have, similar to what we are doing with our thermal inkjet over a period where we've got a few key patterns and that is why we are focusing more and more of our growth business, especially the international business.

And it's the same thing out here where we brought some intellectual property which has a high value product. And we feel that if we market it well, if we sell it well, we do everything well, like I said, there is a chance that this business could be a strong platform. Again, like I'm seeing everything with [indiscernible]. And also, obviously, this depends on my judgment and most importantly execution, but this is what we believe as of right now. And that's why we're investing in that business, and we're still growing the R&D, which we're doing more things out there. And that's the idea.

So -- but fundamentally, the INR 5 crore difference is the INR 5 crore loss between that incurred in CP Italy. Between the consolidated and the stand-alone statement, if someone has asked me that, but the budget is there. So until the sales don't keep increasing in that subsidiary, the machines don't get sold and the time is going to take to get rebuilt. There will be losses because there is a budget of EUR 3 million. And so if you divide that, we're spending EUR 750,000 out there a quarter, which is I think about INR 7.5 crores, I mean what is something [indiscernible] a little bit here and there, the exchange rates and all, something INR 7-odd crores or whatever quarter. So if we're losing INR 5 crores, that means we only made a poor gross margin of INR 2 crore out, I mean if you take a straightforward set of calculations.

[Saket Kapoor, analyst]

So just to summarize, this will be the run rate for the quarter, every quarter for this year since we have budgeted it. Every quarter, we are going to see this phenomenon, there will be [indiscernible].

[Shiva Kabra, executive]

I couldn't hear that very clearly, if you can...

[Saket Kapoor, analyst]

Sir, I was commenting that this would be the run rate going ahead since you have budgeted it for the year for CP Italy. So, for a quarterly basis, the run rate is going to be in the mid of -- between INR 5 crores and INR 7.5 crores. That should be the run rate for this financial year since you have already budgeted for this?

[Shiva Kabra, executive]

I'm talking about the expense that we're incurring.

[Saket Kapoor, analyst]

Yes, sir. I'm also...

[Shiva Kabra, executive]

Even I don't know what we're going to get ...

[Saket Kapoor, analyst]

But expenses have been budgeted, yes, yes.

[Shiva Kabra, executive]

So the INR 5 crores loss that is there because we budgeted an expense of close to INR 27 crores, INR 28 crores, which is part of our planned budget, which we are spending over each quarter. And we feel we are on target and working on it. Of course, we wanted to do a few things faster in terms of getting certain things up in terms of sales and marketing activities, in terms of [indiscernible] developments, but we are on track, and this was part of our plan to spend this much every quarter this year.

In that respect, we are doing that fine. Like, I said, it's going to take some time to get everything back in place to understand what sort of market we're doing and don't forget this is the investment in CP Italy. We're also making equal investments in India also to make sure that the business is also -- because the entire Asia-Pacific and Africa is going to be controlled by India and the CP Italy will be more useful of marketing in Europe -- European region.

[Saket Kapoor, analyst]

Right, sir. And for last point, and I will join the queue. For the domestic market, since we have a long discussion about our investment, how are you seeing current year in terms of the consumables contribution in the total pie since now we have a threshold number of 19,000-plus printers.

And also, if we see an uptick in the economy in the second half or going at since Q1 numbers looks on the right track. So this year, can we look to be closer to that 400 mark as being envisaged by the Board earlier? And also, if you could give some more color how the consumable percentage or contribution is likely to be for this financial year?

[Shiva Kabra, executive]

See, Saket Ji, there is no change in our gross margins at all at any product level. What's changed in different situations might be the type of allocations or investments we are making, which can affect the profitability.

But on the gross margin, whatever products we sell, we don't really -- we're not discounting them or we're not seeing any change in margins out there, neither is a plan to reduce any margins anywhere. Like Jaideep said, we, for the first time, are looking at certain cost optimizations. So we'll see whether we are -- how practical they have, we'll discuss that internally and see whether that can be done on -- but the -- yes, so I think the first quarter, if I [indiscernible] INR 88 crores, INR 89 crores at the end, which was slightly below expectations for me personally.

But I think it's very difficult to say in our business in a single quarter. The pipeline is good. So I don't know if it's like we were unsuccessful or we were just a bit unlucky and a lot of orders will slide into this quarter. I won't see anything. But I think that definitely, we obviously still aspire to meet that INR 400 crore target this year. We definitely still aspire to meet that target.

[Saket Kapoor, analyst]

Sir, I will join the queue. I have some general details more from Mr. Jaideep. I will join the queue once again.

[Shiva Kabra, executive]

Definitely. And if there is specific numbers that people need like -- some very specific details because I don't know what comes in the presentation [indiscernible] but you can definitely check with Jaideep. But if people who can ask that in advance, then we can always prepare it and submit it to everyone during the presentation or during the meeting.

[Operator]

Next question is from the line of Nishant Joshi, an Individual Investor.

Since there is no response, we'll move to the next question from the line of Saket Kapoor from Kapoor & Company.

[Saket Kapoor, analyst]

Sir, my concluding point was about the management bandwidth part also, which you were alluding to, that it is the core decision-making lies with you to take the way forward for these investments in the different geographies of the world, that also have a geopolitical impact also. So taking that into account and the bandwidth part, what sort of description of the team building exercise are needed to grow these businesses. And for the numerical part, sir, how much have we totally invested as of now for the CP Italy, Markprint, and in the Codeology group? If that ballpark number would be same?

[Shiva Kabra, executive]

So I'll take that as two questions. But the first question as far as management bandwidth goes, I think that we've been preparing it for the last 4, 5 years now in terms of what happened. We have to understand that at least two or three of the subsidiaries that are abroad, both Codeology, Markprint and CP Italy, have their own local CEOs and other types of people at least hired, so it's not always everything is being pushed on to Control Print.

But yes, the integration needs to be deeper with them. What we do have is that we have also been preparing from our own side, a lot of our own managers have got that level of skill. And maybe that's also slightly where the thing is because some of these are the people are being pushed out into new positions, new types of markets or opportunities.

And we're getting their juniors and other new people into looking at the existing workout here, maybe that's slightly slowing down things like [indiscernible] big sales strategy change, as we had explained earlier in terms of a combination of industries and verticals and applications rather than being very geographically focused. And so it could be that combination is -- means that we -- it still needs a little bit of time to clearly settle in.

But I feel like the pipeline is strong for this year. And so far, and we should still, like I said, if not hit it, but at least be very close to 400 as of right now is what I believe, on a stand-alone basis.

As far as the second part of the investments go, [indiscernible] INR 45 crores totally upfront as of March 31st between CP Italy and whatever those products or V-shapes products from India.

So between India and Italy, we will invest about INR 45-odd crores approximately, give or take a few percent here and there. In Markprint, we've invested EUR 1.5 million, about 2.5 or 3 years ago and invested the EUR 400,000. So that's EUR 1.9 million in total. I think it's INR 12 crores at that time and now, of course, recently because the [indiscernible] may be slightly more.

In Codeology, we've invested exactly GBP 1 million into that business. So those are the 3 major investments internationally that we made in the European side, but there are 3 very different investments with 3 very different purposes. So even this is difficult to compare them -- and yes.

So that's the major thing. And then, of course, whatever the operating like Codeology and Markprint are both operating profit -- the profitable companies -- so Jaideep has no numbers, you can definitely speak to him. And we obviously expect that the profitability should increase in both companies. As far as CP Italy goes, of course, [indiscernible] 45, like you said, we are funding it further, and we have funded it like I said in Q1.

So we've got a budget for it and what the final bill is going to be, is going to depend on what sort of sales we have during this year. We're definitely expecting -- not expecting, we assume that the pipeline will be stronger and we see more revenue coming out of that site towards the end of the year. And things do look better, even if not in terms of monetary terms, but in terms of real revenue and future market visibility.

[Saket Kapoor, analyst]

Just to dwell it further sir, CP Italy investment is INR 45 crores, and this year, we have budgeted something closer to INR 28 crores to achieve the higher revenue base, that's what the pipeline is for the year?

[Shiva Kabra, executive]

So again, INR 28 crores is what budget for CP Italy, has the expense budget. The company had -- because we bought it through the auction process, we fostered into a bankruptcy procedure, and we bought it in an auction. And as a result, the company had temporarily stopped for a few months. And so the sales, but before that, they were selling about EUR 2 million to EUR 3 million themselves. So they had the turnover. So we're expecting to recover some of that turnover also.

So it's not like INR 28 crores expense [indiscernible] also expect them to hopefully make some money. So if INR 28 crores be the loss we sold like 0 in the year. But obviously, if they do some business and make some profits, then that would be reduced. So if you are just -- I'm going to talk about the expense part because that's all I can predict right now. I don't know how much positive I think we're going to do because it's still very early stage, and we've got a certain operating style. So we can't just like [indiscernible] and feed everywhere and just sell anything anywhere. We [indiscernible] specific manner.

[Saket Kapoor, analyst]

And for the other two subsidiaries, they are self-sufficient. They do not need any funding, neither Markprint nor Codeology or do they also need funding from the [indiscernible]?

[Shiva Kabra, executive]

No funding. They're both profitable. So they're both self-sufficient and they don't need anything. We're not taking dividends out of there, yes, but we don't do invest out there, right? We want them to use the money to grow the business for our store...

[Operator]

We'll take our next question from the line of Karan Bhatelia from Asian Securities.

[Karan Bhatelia, analyst]

Good set of numbers. Jaideep, can you help us out with the revenue mix across printers, consumables, spares?

[Jaideep Barve, executive]

Yes, sure, Karan. For the Q1, for the Printer, it's about 14% of overall revenue. Consumables is 66%. Spares is about 7% and service income is about 13%.

[Karan Bhatelia, analyst]

Right. And the number of printers sold this quarter?

[Jaideep Barve, executive]

The number of printers sold in this quarter is about 622.

[Karan Bhatelia, analyst]

622, so flattish Y-o-Y, right?

[Jaideep Barve, executive]

Yes. There is a timing difference because what has happened is that there are quite of few large prospects we've got, but the orders could not -- I mean, orders were delayed for final evaluation. So hopefully, this will realize in the Q2.

[Karan Bhatelia, analyst]

That's right. Correct. And with respect to EBITDA margins, how comfortable are we taking this run rate for the rest of the year?

[Jaideep Barve, executive]

See, Karan, this is a classic case of like product mix. I mean it all depends upon how much of printers would be sold in majority versus compared to the consumables. It's just Q1. So it's very hard to predict the mix on that. I mean...

[Karan Bhatelia, analyst]

Because I was looking at your gross margin profile, it is pretty decent compared to the last couple of quarters.

[Jaideep Barve, executive]

We are doing well. And hopefully, we would like to continue the same trend, but I can't really tell you exactly because the product mix always changes.

[Karan Bhatelia, analyst]

Right. And also, we've been talking about price hikes, which we keep talking. So how much of that is absorbed in the system and how much of it is yet to be taken? Can you quantify that?

[Jaideep Barve, executive]

Yes, Shiva, do you want to talk about the price hike?

[Shiva Kabra, executive]

Yes. I think we have done 1 like 1.5 years or [indiscernible].

[Jaideep Barve, executive]

This is on October 22.

[Shiva Kabra, executive]

So I think that, that is being pretty much fully implemented. We're going to have our next managers meeting in October this year. And obviously, we need to do some more studies on our own side and see if the costs and other things have increased. Normally, we increase the price of AMCs and filters and spares every year, especially of service-oriented things because [indiscernible] more. So that's a consistent increase.

[Karan Bhatelia, analyst]

I wanted to understand more from the [indiscernible] issue. So that's anything specific over there?

[Shiva Kabra, executive]

[indiscernible] difference one way or the other. Just a slightly longer like lead time or something, but because of COVID, we're very used to all this [indiscernible].

[Karan Bhatelia, analyst]

And any major CapEx ready for this year and next year?

[Jaideep Barve, executive]

Any major, what do you say?

[Karan Bhatelia, analyst]

CapEx, CapEx, capacity expansion.

[Jaideep Barve, executive]

No major CapEx for the coding and marketing.

[Shiva Kabra, executive]

So the coding and marketing, nothing, but you might make a major expansion in terms of the packaging business. So we're looking at that quite actively. So, as you know, a specific type of machine that we have, or created, it's a mono-dose type of a machine with singles of mono dose, as you recall it for a single serving, and it's an alternative to a thermofoam or a sachet or other types of single use [indiscernible] something.

So, for that, the material is linked to the machine, so like a tetra pack thing. So we buy a tetra pack machine [indiscernible] tetra pack material, foam [indiscernible] and so we are also considering setting up a unit from making this material in India. But, currently, we are purchasing it from Italy and the price of the material is quite high along with [indiscernible].

And we think that will be one of the bigger issues going forward in large customers who have -- because they're more sensitive to the material price rather than the machine price. So that's something we're looking at actively. But we're still discussing at board level. As and when we have something to announce, we'll definitely get back to everyone. But, we're looking at it quite actively because we see the significant savings available while maintaining the margin profile and that would also turbo charge the business.

[Karan Bhatelia, analyst]

All right. And last question from my end is with respect to mask business. That's it. We may follow the question queue next.

[Shiva Kabra, executive]

So the coding and marking business, I don't think there's anything significant at least so maybe some [indiscernible] level.

[Karan Bhatelia, analyst]

And how will we see the mask business going ahead? That was the last question?

[Shiva Kabra, executive]

Which business?

[Karan Bhatelia, analyst]

Mask business.

[Shiva Kabra, executive]

So it's not that much of a major focus. The thing is, so the mask business is one of those businesses, it's not losing money. It's not really making money. It's vary marginally positive with [indiscernible]. So it's going, it's not a big focus right now. We are -- there is -- it's not taken a lot of my own personal bandwidth. Mr. [indiscernible] marketing head also has that additional responsibility of this. So he's got some stock that he has created with the team [indiscernible] make a plan to look at that.

But like I said, so from this last 3 to 4 months, I'm not really personally involved in it. It's one of those businesses which is neither profitable nor losing any money either. So because of the opportunity cost, [indiscernible] down in case we want to do something again. So, right now, we are just keeping it going on that basis, but we're also got a lot of plan for the longer term. So you give us like 1 or 2 quarters to give a definitive response on how we're going to take that forward.

[Operator]

We'll take our next question from the line of Disha from [indiscernible].

[Unknown Analyst]

Sir, I wanted to ask that you mentioned that we have invested around INR 40 crores to INR 45 crores in CP Italy investment. And just wanted to confirm, so we'll spend another INR 30 crores throughout the year for the planned expense. Am I getting it right?

[Shiva Kabra, executive]

Partly right. We have spent about, I think, EUR 3.7 million plus a good chunk of other expenses, which have not come in that transaction because, all the ups and downs and this thing and whatever the other secondary opinion that happened on the ship transaction. We have also invested in some sort of facilities within India and in some of our other places be prepared for that. And that's part of the rest of the investments that takes it close to INR 45 crores.

So it's not specifically in CP Italy, CP Italy holds EUR 3.7 million if I remember, just very approximately. And the rest of it was spent in India preparing for this business in India also.

[Unknown Analyst]

And another INR 30 crores will be.

[Shiva Kabra, executive]

We've INR 28 crores operating budget like expense budget for CP Italy, okay. That's the entire expense, out of which INR 15 crores -- INR 13 crores or INR 14 crores is the cost of people and all the other stuff there like electricity, travel and all the other types of things.

INR 10 crores to INR 11 crores is the cost of our R&D budget for this year because we are working on improving -- taking the technology to certain other parts that we can do, so we're trying to extend it because we can -- there are certain [indiscernible] packaging for the liquid. But there's certain other applications we can do with it also.

And I can't see anything because we're under the patent filing process for some of the developments we've already done and some of the stuff is already done. So [indiscernible] post factor news, once we finish our patent filings and they've been accepted and filed, and then let you know what we've done in terms of further R&D.

We've also developed some of the accessories around so like normally machines there, but the automatic carbon eating machines, the other types of things that go along with this, those have also been part of that R&D project. We've also put an RFID, which was one good [indiscernible] because -- so like I said, the material is connected between the machine and the material. So, this will ensure that nobody [indiscernible] any other type of material on the machine, except for above material.

So, INR 27 crores or INR 28 crores are total expense. It's not taken to account any revenues in there. So what it is there is, obviously they were doing some business previously. We expected more business towards the second half of the year as we get our strategy. Obviously, because the company shutdown for a few months, went to an auction process, some of the companies, customers. There is a supplier, everyone has like negative mindset at that point of time, to be honest.

And that's something we have to deal with before the revenues flow back in and we're working on that part. So that's something that we have working on. So, like I said, in a worst case scenario, we could lose INR 28 crores. In the first quarter, we've already spent a lot of that money, but we've also made some profit, some growth profit, therefore the loss was INR 5 crores. I can't say exactly what's going to happen in the next three quarters. [indiscernible] worst case, we lose INR 21 crores, but I'm expecting that we will also sell some things out there and make some positive revenues.

So that's something we only time will tell. But we know that this was part of our strategy as part of our budget, and we had planned for this very much. And we want to make sure that it happen through auction so there are no liabilities that will be there. So, this is part of our plan of budget.

[Unknown Analyst]

And sir, regarding the Indian business, the printers we have sold is in the easy to predict the revenue because of the consumer sales, which is a short phase because our printers can use only our consumer base. So that INR 400 crore and also for next year because our printers used generally 3 years, we get the consumer sales 7 to 8 years, at least we can predict revenue for the coming two years?

[Shiva Kabra, executive]

Yes, of course, what I'm saying is this. We don't give any prediction specifically. I know the board has given a target towards of INR 400 crores this year and [indiscernible] ask for that specifically, and I said that we -- it looks like we'll be close to that, if not there, for this year in this thing. Like you said, there is definitely a predictability in our business in terms of the repeat sales, but it's very difficult to predict exactly on the printers [indiscernible].

[Unknown Analyst]

Yes, yes. Range bound.

[Shiva Kabra, executive]

Yes, yes. And then -- so those things are there. But yes, we're not seeing a bad business in India. Like the market outlook is still good. like I said, because of a change in strategy because of change in industries and verticals because of a little bit of management changes into some of the new areas that we needed [indiscernible], there was some minor slowdown, but I'm not happy with the Q1 results, but I don't think the pipeline is fundamentally bad.

I'm talking about stand-alone business. I'm actually less worried about the consolidated aspects. And I think that what we can see is definitely that if we can -- well, I guess, as you're working towards bigger sales deals it is as in the longer period, and that was part of our sales strategy to work with the customers at multiple levels, at higher levels, and try to execute large projects with them rather than on simply sell.

So it's something that prolong this whole cycle [indiscernible] making a bit more lumpy in terms of that upfront consumer business -- upfront printer business, but the other consumer business is quite predictable and I think also what we've seen is, as a result over the last 2, 3 years, we focused on larger customers, the stability of their own business is quite high, so we're not seeing that much [indiscernible] business.

[Unknown Analyst]

And sir, in terms of market share, have you taken any clients from the other three players. The sort of this Make in India or whatever concept if it works in this industry? And any change in market share related?

[Shiva Kabra, executive]

So, I think the market in March [indiscernible] all three above, long history in India. And India, frankly, not that patriotic [indiscernible] when we do say it in that way. But there's no feeling of a Made in India or like how it would be in Japan, like it's made in Japan. There's no real benefit for in merit or something. I think people prefer international products normally. But we also established in this market for a long time, and everyone knows us. So I don't think there's any advantage or disadvantage [indiscernible] of us coming down to execution.

We do get customers from our competitors all the time. And I'm sure vice versa also it happens. But it is marginal. We had gained minor market share over the last 3, 4 years but consistently and yes, [indiscernible] execution to keep increase that market share percentage between the four of us and then also in the overall market. So the four of us I think we'll have a -- I think would still be 75% plus of the overall market -- 70% to 80% of the market [indiscernible].

[Unknown Analyst]

Like, Domino's, it has more margin than like there is other players are quite below and we are very efficient comparatively. But in terms of Domino's, they've like around [indiscernible] private companies, 30% then we are around 25% EBITDA margin, so is it because they spend less on advertisement or something like that?

[Shiva Kabra, executive]

There are three reasons and of course, from this year onwards, actually like or even last year, because they're not comparable. Because Domino has started the label press -- digital printing press business, and that's actually doing quite well. So they're getting a chunk of revenue from that, and that's distorting the [indiscernible]. I would actually expect that business to have a lower margin in the coding and marketing business, at least as of right now.

But, for the long story short, we just got a higher base at this -- in this business if the base is higher, the number of offices, people -- it becomes a bit more efficient, maybe not so much in gross margin terms, but in terms of SG&A, it definitely becomes more efficient as you become bigger, and I think that's one of the major reasons. And the second thing is I think we've also been going through a bigger set of investments in the last few years with regards to track entries, with regards to packaging, with regards to digital printing.

So we have to incur those costs, which are all part of our own stand-alone and we're not giving you like, okay, you know what I mean, 3% extra here loss. [indiscernible] last year, like our track and trace team and our software development and everything like that. So we're not giving that sort of a thing. It's just a bundle. So I can't give you the exact thing because we don't get that type of break up. But I think that if some of the investments that you're making in a growing [indiscernible] longterm potential output [indiscernible] and you just look at [indiscernible] pure coding and marketing stand-alone business, then this would probably be more profitable.

And the third reason is that one, we have to do our own R&D [indiscernible] pay some royalties to some of our partners and all those types things, I don't know what those numbers are again Jaideep [indiscernible]. Eventually, take out that royalty [indiscernible] you take out some of the other R&D investments that we have to do ourselves as a stand-alone company as Domino's is putting obviously more investment, but [indiscernible] whereas for us, that percentage of developing R&D cost as a percentage of [indiscernible] significantly higher to maintain our IP competitiveness versus something like [indiscernible] billion dollar companies.

So if they spend $20 million, that is like 2% of the assets. We are spending probably more than that as a percentage of [indiscernible] royalties [indiscernible] those technologies for R&D types of things. So [indiscernible] INR 340 crores [indiscernible] as 2% at least spend or more than that. So that's part of the core aspect which I'll say that -- and this might be a permanent aspect because Dominos is just a bigger company. They're always going to have a bigger [indiscernible] the bigger the companies, and they're going to have like bigger opportunity [indiscernible] and that's something that I think this factor cannot be changed.

[Operator]

The next question is from the line of Rupen Masalia from RN Associates.

[Rupen Masalia, analyst]

My question is, it is nice to see that when it comes to capital allocation, we are committing towards core business over maybe towards adjacencies in increasing the total addressable market for us rather than what earlier we used to do by building up the treasuries in equities, so that's a good thing.

And since in recent years, your committed overseas in Markprint, Codeology, and CP Italy, I know currently CP Italy is like an incubation, but then if everything -- strategically, if everything falls in place over the next 3 to 4 years, maybe in 5 years' time, all these new initiates, especially overseas investment, how big can it become in terms of generating revenues and, of course, profitability, yes. This is question number one from my side.

[Shiva Kabra, executive]

Yes. I think that, like see, we don't want to predict -- we don't want to predict our own coding and marketing business revenue. [indiscernible], who's part of the AGM and obviously asked Mr. Kabra and the other directors [indiscernible] INR 400 crores thing. So we would just -- yes, I would say that you're still committed to that

And that was on a stand-alone basis for Control Print, primarily around the boarding and marketing business. Now, as far as other things, obviously, each thing has its own market. And the addressable market, the idea is right, so that the addressable market will get bigger with these other things. But in the end, we can't predict what it is. Obviously, one bigger thing that we felt like when we're talking about specifically the V-shapes acquisition, we felt that this has the potential to be a platform play in the longer term, so not just an adjacency, but a full platform, which could be a similar size and profitability as Control Print if not bigger because it's a much bigger addressable market.

So -- but it's difficult for us to give any type of prediction because we don't know ourselves. We are still, like I said, some things are in the investment phase, some things that we're seeing better now that we've got like things outlined, and we are seeing -- converting into revenues. One or two things -- one, two things are still in the investment phase. And our strategy and execution still needs to be developed in all of these different phases -- in all of the different product lines, somewhere like very [indiscernible] stage like in the packaging business where we do a long work.

And then in some businesses, we still need to do a lot of optimizations further, like even in the track and trace or something, there's still a lot of things that we still need to do to -- in the end, if we're doing a business, we want to be #1. We just don't want to add some revenue to our profit to our company. We want to be the leader in our IP and the sort of technology and the sort of benefit is bringing to customers, not just be there. And not just use the Control Print network to cross-sell it, but you want to [indiscernible] genuinely by giving the best technological platform available to those customers and do something that's going to be two steps beyond what everyone else is providing currently.

So -- it's going to take some time, but it's not possible for me to predict any market. Definitely, I can say that the addressable market is below. But, in the end, it's all going to come down to whether we can keep innovating in terms of the technology, we can make it as reliable as a current coding and marketing platform. And that's something that's very important for us to make sure that's extremely reliable. And the other part -- the last part of [indiscernible] come down from the sales and marketing execution. And obviously, that's something we are working on [indiscernible] still has to be developed.

We only have -- I think [indiscernible] management [indiscernible] that's a fair question. So we only have a certain number of experienced resources that we can cross allocate it to other businesses without affecting our coding and marking business too much. So we are doing that, and we've done that. But it will only happen [indiscernible] base.

[Rupen Masalia, analyst]

Okay. Yes. That's helpful. And last question from my side, is pertaining to standalone business like within the stand-alone coding and marketing business, pharmaceutical vertical, how it is, especially in the light of mandatory requirements of [indiscernible] top 300 selling formulas. So how is the pharma business [indiscernible]?

[Shiva Kabra, executive]

So, it's looking promising. I can tell you the pharmaceutical entire whatever pharmaceutical business we were doing in Control Print, that has been taken out and handed over to the entire track and trace division. The track and trace division sales team is responsible for normally track and trace sales, but also all sorts to sales to pharmaceutical companies because that's going to become more and more prominent.

And I won't see anything -- like obviously -- and there are some of the top 300 brands [indiscernible] using our ports and being integrated with us. We're not #1 by alone in that top 300 brand list, but we are looking at getting up there. I'll give you some -- maybe towards the end of this financial year [indiscernible] update on that. We are still working on some companies and we're still working on some deals and I'm hoping that -- again, we'll only talk about it once we actually execute those things [indiscernible] we get the business. So I'll tell you about that later down this year. I'll be able to give you a very good better idea that whether we are succeeding or we're not by the end of the financial year.

[Operator]

We'll take our next question from the line of Saket [indiscernible], an individual investor.

[Unknown Analyst]

So my question is like, in -- regarding revenue model. So, in some sectors like [indiscernible]

[Operator]

The line is disconnected. We'll take that as a last question for today. I now hand the conference over to management team for closing comments.

[Jaideep Barve, executive]

Yes. This is Jaideep here. Thanks a lot, everybody, for taking out your time. Keep supporting us, look forward to your continued support.

[Shiva Kabra, executive]

Thanks, Karan. Thanks everyone, for participating. I think a good set of questions and really happy to address them. Thanks, everyone.

[Operator]

Thank you sir. On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.