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Control Print Ltd
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Ladies and gentlemen, good day, and welcome to the Q3 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, Mitchell. Ladies and gentlemen, good evening, and welcome all to the Control Print Limited Third Quarter and 9 months FY '23 earnings conference call hosted by Asian Market Securities. From the management side, we have with us Mr. Shiva Kabra, Joint Managing Director; and Mr. Jaideep Barve, Chief Financial Officer.
Now I would hand over the call to Jaideep for his opening remarks, post which, we shall open the floor for Q&A. Thank you, and over to you.
Hello, everybody. Good evening to you. I'm Jaideep Barve, the CFO of Control Print Limited. Welcome to the Earnings Conference Call for the third quarter of the financial year 2022/'23. I appreciate that you've taken out time from your busy schedule to attend this one. Hope you all are safe and healthy, and wish you and your family a Happy and Prosperous New Year. Mr. Shiva Kabra, the Joint Managing Director of Control Print Limited, 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. For those who are probably reviewing this company for the first time, we would like to mention that Control Print Limited is in the niche coding and market segment. This is an oligopoly with just 4 major players, 3 of who are multinational corporations. And us, that is Control Print Limited, is the only Make-in-India manufacturer.
We have 2 manufacturing facilities, one in Nalagarh in Himachal Pradesh and the second one in Guwahati in the state of Assam. At Nalagarh, we manufacture printers. In Guwahati, we manufacture certain types of printers and consumables required for our operations.
We have got a strong sales and service team of 350-plus engineers spread across the company. At the back end, we've got a robust SAP ERP system, which takes care of our financial, production, process and sales. We also have an integrated CRM system. Thus, we provide maximum transparency in the accounting, sales, after sales as well as for performance planning and order to receive collection processes. Our systems and processes are robust, and they give necessary confidence to the team, vendors, customers, bankers, auditors and inspectors.
We do have a widespread customer base catering to multiple industries, like ICE and cables, metals, automotive, food and beverages, dairy, FMCG and pharma sectors. We've got a robust ID base spread across the country. As of now, we have about 16,500-plus printers across industries.
Just to give you a brief analysis of the stand-alone financial statements of Control Print Limited for the Q3 of FY 2023. On an overall basis, the manufacturing activities in the third quarter continues with a rising momentum as most of the industries, who take the filters and consumables from us, also continued the production and met their higher demand. However, we believe that it is still not at optimum level. There's a lot of scope of improvement, thereby our printers as well as consumables business also is going to increase.
On the revenue front, there was an increase in the printers as well as the consumables business in Q3. Both printers and consumables registered strong growth pattern. Our service ink portion of revenue continues to be stable, so as is the spares portion of the revenue. The revenue for the quarter witnessed a year-on-year at 20%. We continue to penetrate competitor accounts in key sectors like pipes, food, FMCG, dairy, cement and pharma.
Our overall industry performance in the 9 months is still largely dominated by the pipe sector, followed by the food, FMCG, dairy and cement. In the plywood sector, we have achieved a good control, and probably we are the most dominant player in the sector. In the sugar industry, we've consolidated our position as one of the key market leaders.
In the consumption side, we can only say that the gross margin for the quarter 2 -- quarter 3 has dropped as compared to the previous quarter. This is mainly because of raw material purchases at high rates in the spot market. The management is working at a strategic level to optimize inventory so as to sustain any probable shortages for a period of further 3 months.
Employee costs as a percent of sales have come down marginally. But overall, these are the same levels in absolute numbers as compared to Q2. Depreciation and other expenses are steady as in compared with the early quarters. With reference to the profitability level, on a year-on-year basis, the EBITDA, the PBT, PAT and EPS have grown by approximately 30%, 45%, 42% and 42% respectively.
The company maintained healthy margins. The EBITDA has been stable at 26% to 27% for the last 6, 7 quarters. But we feel there still exists a considerable scope for improvement in EBITDA because higher revenues will come. And obviously, there will be economies of scale attached to it. For us, the way forward is we look forward to higher consumables sales with improved industry production. We've launched a new product in the LCP segment. Our earlier product, Pench, has stabilized in the market now.
In marketing, we are focusing on the key accounts. Our installed base will be increased in the future, thereby, we will increase our market share. As you all know, we have established holding company in the Netherlands, which has acquired another component called Markprint. We expect some good traction with them. And obviously, last and not least, new technologies are being exposed.
With this brief background, I'll leave the floor open for any questions.
[Operator Instructions] We have the first question from the line of Deepan Shankar from Trustline PMS.
Congratulations for a good set of numbers. So firstly, Jaideep, can you please provide the breakup between printer, consumable and other set of revenue?
See, printer revenue would be about 20% of our revenue. Consumables for this quarter would be of 57%, services will be about 13% and spares would be roughly about 8%.
Okay. So we have seen consumables growing at a better rate than even printer, so the product mix profile has been favorable for us. But still gross margin has been lower. So any specific reason for that?
Well, the gross margin has dropped marginally as compared to the sales basically because like we are a company, which is depending on semiconductors and shapes as well as electronic goods. And right now, not just us, but the other players in other markets as well as other players in the other sectors, everybody is facing shortages of such components. As is about that, I mean, as a strategy, what we are doing is that in order to make sure that we have the required materials for the production, we are buying it at a spot market.
We also have the contract with our regular customers, regular suppliers, but then the lead times with them are quite high. So just to not fall out of stuff and not to have a situation where we have orders, we cannot execute them, we are really like buying at higher prices and making sure at least we are having a risk conscious attitude in our work. Shiva, you might wish to add anything on this?
Yes, I think it's put well. I think that there is basically some cost increases that have happened. And we've not maybe acted proactively to increase our prices to our customers, and we're sort of looking at that and we're working on that. But it's a slow process because, of course, everyone is resistant to that. So hopefully, we'll get enough of a cost and price increase to cover the cost and fees that have come our way.
I think I will say that some of the cost increases look like they're more permanent in nature now. One set of cost increases -- because we bought things from the spot market to fulfill our shortages, one set is also that I think some suppliers want to raise the price. So that is the way it is. And we'll have to respond by either reengineering things or getting alternative suppliers or convincing our customers to pay more and working on all 3 fronts.
Okay. So if I understand correctly, so this gross margin from the printer business has gone down substantially, but consumables is remaining at the same level. So -- but if we can pass on the prices to customers, so our margins can improve from here on as well, right?
A little bit of all. So I think even the consumables, like -- of course, like I said, the gross margin is still very high, might have gone down by 1% or 2%. So the price increase has been across the board 1% or 2% on an overall basis, but it's -- you won't feel it that way, it's like some items which are short have gone up drastically. So they could have gone up 100%, 200% certain chips, so other things.
But yes, definitely, the effect is seen more on the printers because the printers are sold on like almost no profit basis. So the cost increases out there definitely effect us a lot harder. But I mean, there was a shortage. So we had only 2 choices, either you pay or you shut down. So I mean this is the story for the last couple of years now. But What's happened is that maybe I guess it is -- there is some higher cost inventory that has there. Some spot market purchases, which can at least moderate for sure, then the rest is you know.
Okay. And lastly from my side, so the food and pharma being a dominant sector for these MNC players in our sector, so how is our market share improving there? So are we getting good reference points from our existing customers to expand into these space to improve our market share?
Are you talking about the pharmaceutical market, or which...
Yes, food and pharma specifically, yes.
Yes. So we've been increasing our percentage of sales there. What happens is that, for us, I think overall in this quarter, there's been a bit more production normalization. So even in some sectors, like pipes or other segments of ours, there has been a bit of fluctuation because even they've had some increases in resin prices or decrease -- I'm not sure actually what happened. But there have been some fluctuations. So even their production has been affected.
Basically, the Construction Materials segment has been affected more up and down, or some of the more industrial segments. So because they sort of come back to normal, the growth that we should have got in the last 1 or 2 years by selling the printers, we didn't get so much. And the sign is just that they are buying fluids at a more normal rate and that's why we've got a better result.
So I think, obviously, our overall percentage of food and pharmaceutical, dairy and beverage and so on is increasing as a percentage of our overall revenue. But ours is still industrial -- a little bit more industrial dominated. But it's improving, in that it's become more balanced. It's going towards 50-50 slowly and steadily. And our market share in specific segments is also improving.
[Operator Instructions] We have the next question from the line of Naysar Parikh Native Capital.
So my question is on the Markprint acquisition. Can you talk about the performance of the company? What was the revenue in 2022? And secondly, we had plans to kind of bring some of those technologies into India and modify it with our printers, et cetera. So where are we on that journey?
So I can take your second question, but Jaideep will answer your first question. And I think I'll just be honest with you, we only consolidated them from July 4 or something in -- or some time earlier this year, so I don't think we're allowed to talk of the prior period before that. So that also is something that Jaideep will talk about that on.
Naysar, just for your benefit, as rightly said, by Shiva, I mean, the acquisition happened on the 4th of July. So from 5th of July onwards, we are consolidating. But the period ended December, it looks good. We've got EUR 0.5 million as the revenue and 1/10th of it or 11% of it goes as net profit for the company. Naysar, you are there?
Yes, yes. I got that. Sir, my second question was on the technology bit of the market.
Yes. So we are behind on that. We expect to maybe have some things starting by the end of this year, maybe we'll only see that towards like practically March of this year. So what happens is that their mentality and their year-end is also for December 31st. So they also had some orders that they needed to execute, so they were really quite busy with that. So there's no time to work jointly on development or other types of projects because they were -- they had their own business that they have to execute at, which took their priority for the last 2, 3 months, so that's the situation.
But we've got some stuff lined up. I think, a much more consolidated strategy in the coming year. And I think in 3 to 6 months, we should actually see some things come out. And my experience is that we'll have to devise some of those things because -- to improve them and modify them for the markets that we are in and also to eliminate all the bugs and the issues that actually happened. And so the optimization will happen. And then you'll have the products, which are very solid for the market probably in like 12 to 15 months -- 12 to 18 months, something like that.
Understandable. Got it. And my second question is on the Track and Trace technology. So on that again, are we seeing any progress with customers either current or new? And what would be our plan on that one going forward?
So actually, we're working quite aggressively on that right now. There is some different requirements that are there. So I can't talk about specific customers and things. But in general, the pharmaceutical industries are continuing requirements, I understand it's a domestic requirement. I think the government is not going to go back on some requirements that they've asked. That should be interesting also.
And yes, the thing is like these are much more difficult executions because, like I said, we have sort of come from behind in this market. We didn't have the solution earlier. And what's happened was, as a result, customers also give us the more difficult projects where we're not able to get solutions easily. So it's like, oh, cash flow I need to. But what's happening in our experience also needs to improve. So it's a bit of everything. But definitely, it's going all reasonably well is what I am saying.
Got it. So I need to understand do we want...
I mean, the financial results are not there, but we're making progress. Like there is some financial results, it's not enough to make any difference to our top line and bottom line, but we're making progress out.
Understood. Understood. Of course, I think that will take a couple of -- that will take a few quarters. But just from a product perspective, would we -- like would you say that we have a product in place, and now it's just about more getting customers and installing it? Or are we still in the product testing and getting the product right stage as well?
So a bit of both. We do have a product and we are optimizing it as we go. And what happens is you know different customers have different lines, different requirements. So a lot of times different handling systems come in, different types of printers and resin systems or scanners come in. So you need to keep improving. So like what will happen is you'll develop a standard product, then a customer will have some various requirements that you see are going to print on a injectable or vial or something, ad we have to develop a solution for that, or someone will not have space on his thing or someone will need to print with an invisible ink and then scan it with specific type of scanner. So some people want an OCR or like not just a 2D scanning.
So there are different sorts of requirements that come up, you need to cater to all of them, because -- and yes. So what you do, you sort of have a -- it's like make a standard car and then you have like an automatic version or a 4-wheel drive version out of this, but you made the standard car and you've got to keep doing all those things because that's what specific customers want for their specific -- and that's what the specific lines demand and then you have to cater to that.
All right. Understood. And last question...
I hope that answer was explanatory.
No, that is very helpful. One last question, then I'll come back in the queue, is on your sales and service team. How big is that team today and how has it grown like in the last maybe 6, 9 months? And are there -- in terms of coverage of clients or getting new clients, like are there any particular metrics that you track and you can share from a sales and service perspective?
Jaideep, how many people exactly do we have approximately in the...
350 plus engineers, especially sales and service, 3-5-0.
Okay. And how has that grown? And do we plan to like expand that again further in the coming quarters significantly or something?
So as of right now, we have enough to cover our markets. We might need about 20 to 30 more salespeople and maybe a few specialized service people because what's happening is, like you said things like CAC entries come up or even like Markprint type solutions. And honestly, these are not like product sales, which is what we do. These are like projects, so people have to study the line, integrate with their parent line, get data from their SAP, integrate it, send it back to the cloud and click an SMS and authenticate it, like there all sorts of things that happen.
Yes, so it's a different type of -- also it requires like a skilled person, but also people who got a sort of cross-functional mentality, so they understand not only the electronics but also like definitely a lot more software expertise and also a bit of mechanical stuff because actually handling of the products, that part is quite important. So yes, I don't think we need like large numbers of people, but we need like people who got a bit slightly more cross-functional trait type.
Got it. And the 350 is comparable to the competition, in the sense size adjusted, like are we at par in terms of coverage? Or would competition have more or less for the same size of revenue?
I think we probably have a similar team compared to Videojet and Domino. I think Imaje might be a bit smaller that I recollect, but similar teams. Maybe in fact, our team might be a bit bigger than if you get Domino on the service side, maybe not on the sales side, but on the service side, yes, could be, because we've always emphasized like high quality of service. So I think I'm quite sure we have at least 30%, 40%, 50% more service engineers than them.
[Operator Instructions] We have the next question from the line of Karan Bhatelia from Asian Market Securities.
As far as I recollect, we had one order which was yet to be executed completely. 17 TIJ printers for the brewery company and a couple of laser printers on the export. So how are we standing as of now?
I think we must have executed all outstanding orders. They always sum at the end of every quarter, but there's nothing like major that's outstanding. So normally, in fact, we don't talk about specific customers as well. So I actually don't know we had ever disclosed anything like that. But yes, there's nothing specific that major or that would warrant a public announcement, I think.
Yes. This I'm referring from the second quarter con call. And Jaideep sir, what could be the...
Those would have been executed. Those would have been executed. It could have been -- we've had some like supply chain issues throughout. Even now we have some, but we are trying our best to work through it. So yes, there have been times when there have been some backlogs and then they get cleared and then there's new backlogs and things like that, yes.
Right, right. That was helpful. And Jaideep sir, volume printers this quarter and volume printers for the second quarter as well.
I would imagine we sold 800-plus printers in Q3, and about 675-plus printers in Q2.
[Operator Instructions] We have the next follow-up question from the line of Naysar Parikh from Native Capital.
So my question was on the mix between CIJ, non-CIJ for this quarter. And also if you could talk a bit about where do we stand in the non-CIJ category now in terms of, say, market share with some of the other players.
Yes. Shiva?
As far as market share goes, I can only say this that it's not possible for us to disclose because we only have an idea of how other people are doing, right? We do get their numbers at the end of every year from the Registrar of Companies. But there's no breakup of anything from their side, right? So there's no -- I mean it's a very broad level sort of breakdown, right? It's just a revenue number, expenses and profits and so on. So it's very difficult for us to know what their mix is. It's just an idea.
But I do believe that, at least in the thermal inkjet and the high-res space, we have 2 good products, and we're doing well there. And in the thermal transfer space and the laser space, we are more competitive than what we were before, for sure, especially in the laser marketing space, we have picked up to some extent. And yes, the CIJ market is still the main market. But as a percentage of our revenue, I think non-CIJ has definitely increased. And some of our growth has also been -- what I'd say like the non-CIJ would have also contributed growth significantly, not just the CIJ. But Jaideep might give you like a better overall number on this.
Jaideep, do you have the numbers, sir?
Well, I have the numbers. But I mean, these are strictly confidential numbers, the breakup. I mean we wouldn't give this peer type.
Okay. Understood. Got it. And my final question is, I think you had mentioned around INR 400 crores is what you are looking for as a near-term target, I think maybe '24, '25. So just want to understand, in that journey, where do you think we are? And what are the 2, 3 things we need to do to get there and by when we can get there?
Yes. I mean so I think that target was sort of put out by our Board, and they sort of put that as something that we should aspire to at least. And I think we're doing fine on the path out there and you should get there approximately that posted date, if things go well, of course. So it also does depend overall on the broad economy because in the end, we are not supplying something direct to consumer, we're supplying on products, which are then being supplied to consumers or businesses elsewhere.
So obviously, we saw with the coal rate and then, of course with some variations that happened in the Russian-Ukraine situation, they can have like weird effects on various markets. So yes, you've seen some fluctuations on our own side in the last 2 to 3 years now. So assuming things are like okay, I think we should get there. There are other opportunities we have to tap, like we said, like the Track and Trace like the market. I don't think everything has to go well, but we have to get a couple of things going well to get that extra boost to get there, and that should happen.
Got it. So if I heard you right, you're saying INR 400 crores should be like the FY '25 target?
Yes, approximately, that's what the target that has been set for us. And so we are obviously trying to meet that expectation.
We have the next question from the line of Saket Kapoor from Kapoor & Company.
Sorry, maybe my questions will be repetitive, I was very late to join the call. Sir, as we have seen the nature of our business, quarter 4 is traditionally, in terms of revenue, the best quarter. So for taking into account what has historically been, is there a very good likelihood that we will be having Q4 also traditionally the way it has been over the last few years?
I mean it's not possible for us to predict because like we have been only, I don't know, 18, 20 days into the quarter. So we'll obviously be able to know like maybe in 2 months, 2.5 months. But the market seems okay, like I don't think it seems bad or good or anything like as of right now. It seems stable. That's what I would say. Now it all depends on how we perform. I wouldn't say the market is overly moving. I wouldn't say the market is overly bad. Obviously, compared to the ups and downs of the last 2, 2.5 years, it's in a better situation. But it's for us to perform I think to get that continued level of performance, and that's what the situation is.
I can get your point, sir. But what I was looking was on a sequential basis, we have seen growth in our revenues, top line, bottom line. And seasonality factor or the year ending part or whatever the pillars that we get in advance from our customers also give us some understanding. And you are very correct that we are only even -- not even 15, 18 days into the quarter, if we take -- exclude the holidays. So a fair point that we won't be able to comment on the same. But taking into account how the business environment has shaped up over the past 9 months, there is a very likelihood for us to keep this trajectory. This could be a good understanding. Sir, if I look now...
So we don't project or we don't forecast or anything like that.
Sir, I'm not projecting.
So for everyone's assumption...
Let's assume, yes, yes. Correct.
We obviously all have to make -- I think as of right now, I don't see anything unstable in the market. Like I said, I can only say that the market doesn't seem overly positive, it doesn't seem overly negative. It just seems like a normal situation which, for us, like I said, even after these ups and downs or even with the supply chain situation stabilizing to some extent, it's good because it just means things are better, with less external factors controlling everything.
So I can't -- like I said, we can't predict, neither do we project as far as Q4 or any other time goes. But yes. I mean, hopefully, we'll have a good quarter, we'll see. And we're in -- April 20th or 24th or whatever the day is, I'm sure we can -- we'll have the numbers on the table that day, you should have patience.
Sir, when we check -- when the Board looks at this number of INR 400 crores top line, the projection for FY '22, how likely would be the mix from the Consumables segment and the Printers segment? What are we factoring in when we are looking at INR 400 crore top line? In terms of the consumable percentage -- yes.
I think the Board -- so there is -- I mean, I don't see the mix changing too much. We already had a good mix.
Okay. Can you comment on what the mix has been for the quarter, sir? Very sorry to interrupt you. What was the mix for the consumables products, sir, for this quarter?
Jaideep, could you just repeat that?
I'll repeat it, Mr. Saket. It is for the Q3, about 20% of the revenue came from printers, 57% came from the consumables, about 14-odd percent from the service and spares contributed to 8%, roughly 100%.
Correct, sir. And sir, how has been the performance of our -- the investments we have made in the 2 companies, Innovative and the Netherlands ones? And what our programs -- what are we envisaging going ahead for the next 2 years? How are these companies going to contribute to Control Print, sir, these 2 investments?
So I think we just answered this question about Markprint. But Jaideep will repeat these again. Just give me one moment, Jaideep?
Yes, sure. First of all, Markprint, see we acquired Markprint on the 4th of July and then we've consolidated it only from the 5th of July onwards. But as of now, we are roughly about approximately EUR 500,000 in the top line, revenue from operations. And the overall income is about -- net profit, what you say is about 11% of the sales for Markprint. When we talk about Innovative Codes, which was our acquisition earlier on, so for the 9 months, like we are about INR 5.67 crores of revenue. And we're just now broken even, which is marginal profit towards the end of the day. I mean, we are in positive in net profit terms.
Right, sir. And what is the likelihood of their contribution? I mean like the growth which we can -- these companies can project going ahead, what steps are we taking to improve the profitability? First of all, their reach, the revenue profile and thereby the profitability also, what are the steps that are in the end with or any further investments we are contemplating, sir?
I can say at least regarding ICIPL, the fact is that we had some supply chain issues. Now they are sort of like more of an economy type of a brand or whatever you want to call it, right, of ours or not an economy type, but like a subsidiary, which is slightly focused on slightly more cost conscious part of the market as compared to Control Print.
Now what happened was we had a shortage of printers. So actually what -- some of the components we use in our printers are common to the printers we supply to them. Especially on our own supplies, situation with them over the last 12 to 18 months has actually been very poor. So if us -- we've had issues, and I even did mention on the previous calls in fact we had to -- we've actually lost some orders in the last 12-odd months because we haven't had the supplies. So we've had to sacrifice some of the C and D category type customers in some cases. But the situation has been a bit worse with them because we've not been able to supply them properly.
So now that our supply chain is coming back to normal, hopefully we'll get a better result out of them in the coming year because our supply with them will also improve. And it's also slightly -- they have taken some more time to understand the printer because our people have been working on this printer for generations, so even when it changes from one generation to the next. We have issues and we have to do a lot of training, but at least there's a base of familiarity. For them, it's totally new. So that could have also been a contributing factor. But the supply chain was the biggest issue in the performance of ICIPL or I really do believe they would have done significantly more business.
But I hope that now if there are no supply chain issues from our side, we will see a better performance from them going forward. And regarding Markprint, of course, we might want to invest some more money in them. That's partly also because we want them to be able to handle some more things, be able to support us. But at the same time, we expect them to grow also. And so the money we've invested, we expect them to provide a return on that also beside what we expect to benefit in terms of our own synergies.
So what's happened is, if you didn't hear earlier, they've been busy executing their orders because they have to build before December 31st because their customers require that. So some of the expected projects we were working on together ended up going slow. And hopefully, by March, we'll actually see some of the initial results of those projects. And in another 12 to 15 months we'll actually like make those products -- fine-tune those products that are extremely reliable. And they are market competitive, if not market leading. And then they can, at that point of time, start getting significant revenue for us.
Sir, a small point to continue to it. So when the -- when we invested in the company, was it through new equity issuance or there, we acquired the stake from the existing promoter? How much money was invested in the company to grow the business and how much was paid to the promoter -- our promoter there?
Yes. So I think in our disclosure, it was clear that we spent EUR 1.5 million to buy out one nonworking partner and a part take of the working partner. We bought 75% of the company, that does mean as a buyout of the existing shareholders, and 25% of the company is with the current managing director, who is still running the company.
So none of the payment has gone to grow the business. It is -- the total payout has been toward -- to the promoter to acquire the controlling stake?
Yes.
Okay. And as you mentioned -- you mentioned that you will be growing the business with the money you have paid to them. So whether they have any commitment to further deploy the same to grow the business or I could not understand what you were trying to convey there, sir?
So I said that we obviously invested with the reason to acquire the technology and use it for our own markets. And at the same time, we believe that they also can grow and capture their own markets and grow, so both companies can grow. We can benefit because they can help supply some products where we can use it for certain parts of the top end of our market, the premium segment. And they can also grow because, obviously, they are growing, that's why we invested in them. And they have their own deployments in Europe also. So the situation was that because, as you said, we have invested the majority of the money or the entire set of money to buy some existing stake, we do feel that there is a need to look at investing some minor amount of money in the business.
This is also, like I said, partly because we want that our own development has not slowed down, so that they have extra capacity so that they can support their own European requirements, but also they can support Control Print for its requirements for India because we don't take things from them as is, we want some changes to the products. Otherwise, we feel that it will be too expensive for us.
We're starting, yes, on the expensive side, but that's a very small market. So we need to make some changes and work together to optimize those products. And even the performance and the ruggedness for India needs to be at a different. So there are some changes we need from them, which costs money and takes development, effort, resources and time. And because we want it for ourselves, for Control Print, we would -- we are looking at increasing a little bit of money directly into the company, not to buy out any promotors or anyone else, to expand the resources of Markprint.
So sir, going ahead when will we see the product introduction from this acquisition for Netherlands? When can we look -- what is our plan so that we will be introducing their product at the right price to the customers in India? What should be we looking for?
We'll get some products, like I said, by March of this year. They will not be optimized to that level that we want, but they will work. And then it's a continuous process, always with us. It's never a onetime thing. So you get the product, you have to put in the market. There are customers who will complain about many things. Then you will go back and you will change, and you will get closer to what the customers want and then you will change. And at the same time, we'll also work on -- suppose we make a higher volume of this product, how do we get that cost down so that we can increase the market further and sort of create a cycle of economy of scale.
So this is something that I personally believe normally takes 12 to 15 months after the first product is launched, at a minimum. So I expect that if the product launch is successful or if the product has a market, it will take us another 12 to 15 months from March, 12 to 18 months maybe before...
Right, sir. A small point, sir. Which industry are we first -- will we be introducing the product -- catering to which industry with the one really we...
Mainly pharmaceutical, and also some industrial customer of us, who require it for some branding purposes.
Right, sir. And sir, what have been our utilization levels for the Consumables segment, sir, currently?
I have no idea, but we can definitely -- there's no stress, we can make our own need to.
Didn't get you, sir. Come again?
The issue has been more right now, again of supply-related issues for us, regarding consumables production, where we had some shortages of certain resins and dyes and stuff. We couldn't meet the production there. But now I think that streamlined. I mean there's no shortage of capacity. I think we can always work like more hours if we have to. So I think that should be correct right now.
Sir, you are explaining that -- sorry, sir, I interrupted you. Last line, sir, what you said?
No. I said just no CapEx is required, if that's what you meant for us.
Okay, sir. You were trying to explain that whatever the headwinds we were facing earlier because of the supply chain issues, those are now back to normal. And as and when the demand -- in the normal course of business when the demand picks up, we would be in a position to easily supply the market without any further CapEx? This is the better understanding, correct understanding, sir?
No. So I think that there are supplies chain-related issues. They are less than before. But I never said there were no supply chain issues that we have currently...
Okay, okay, okay. So what steps are we taking to...
And I said that -- yes. So like we are paying money to buy things from the spot market where we have shortages. We are trying to look at alternative suppliers, who have similar -- same product as we have. But normally, we don't have exact copies of the same products, so it's a problem. We have similar products and so on. So -- but yes, in terms of the fact that, yes, we can increase our revenues without incurring CapEx, that's not an issue. The supply chain issues is a different issue.
But it's improving. I'll say the situation is improving. So before if we had 50 parts, we just bought out of 1,000, maybe now it's 15 or 20. But it's -- this was shortages. And we did one software reengineering to change one critical part. But it was so difficult that I don't think there's any appetite to do it again. So those are the things. I think we will just spare more money. It's better for us to spare more money.
Right, sir. Just to keep up the service with the customers, so that their lines are not disturbed.
Yes. Because what happens is if you change one thing, it would be so much testing, development, and then you have 2 lines of components for the same product, then your economy of scale splits. And there's a lot of other issues that happen. So it's not easy for us to accommodate any type of change in one generation of the entire piece, because even if you look at our printers overall, it seems like we talk 600 to 800 printers, but it's still nothing, if you look at real production. It's not like a real production, so it's a small volume.
Didn't get your last point, sir. Come again?
I said even if we look at 600 to 800 printers a quarter, I said it's not a real production volume. It's very small. I mean we know that people are washing machines or fridges or something. They're the ones that are like real volume. If you look at this, this is nothing. It's like even if we make 3,000, 4,000 printers there, it's nothing. People are making like millions of TVs or phones or -- so the other ones are the real volume. And they can afford to maybe even have 2 lines or reengineer the entire software or something to accommodate some shortages and stuff. I think, for us, it's too difficult to do that.
Sir, lastly, sir, returning cash to the investors, sir. Definitely applaud the Board giving -- in declaring this interim dividend. But when we look at the tax incidence part of it because of the changes brought into the same, the tax incidence is higher and it is taxed at your investor. So I request the Board and people through you that innovative ways -- like others should be deployed in returning cash to us, rather than looking at only the dividend as a payout. So the short point was the tax incidence appears to be higher. Since you are also the largest shareholder, you can -- you are feeling the same pain as the other investors are.
Yes. So Saket-ji, definitely, we have raised this point earlier, in fact, maybe some other investors also have, I'm quite sure. And I think we spoke about it. So I did say, in fact, we do have like more than INR 50 crores in cash or cash equivalents or something. And I did say that when you go above that level, we would be returning or looking at all the excess back to shareholders unless there are some acquisitions that we might make.
So we are looking, of course, at all options, all growth options for the business. We are looking also at how to return excess cash if there are no available things. So I can't say -- this is a quarterly result. Obviously, in April, it'd be our -- I mean, when we come back to you, there will be a final result. And maybe that time or the AGM time, we'll come out with a clear path of action. Because we've been quite clear that, obviously, it doesn't require much CapEx as of right now. Of course, there are small things here and there, like putting a few hundred thousand euros extra into Markprint and maybe a few crores here and there, but nothing major.
So it's more of a technology-based business, and we have the core technologies with us as of right now. So like I said, the options would be acquisitions, strategic growth areas, the way we can look at, beyond acquisitions, also like partnerships or other avenues. The proceeding related to coding, marking, digital printing and the packaging industry, we did announce of V Shapes joint venture. Jaideep, you can -- I think you've disclosed that sometime or the other.
We did, we did, yes.
Sometime maybe -- yes, so we -- and of course, like we were very clear that we will return the excess cash. And of course, the method of the return is not my decision. It will be a Board decision. But I mean I guess you are correct that I am paying 14%-something tax and -- but it's not my decision of how the excess cash would be returned to the shareholders. It will be returned, but the method I can't say. As of right now, I only know buybacks and dividends. If there any other innovative methods, we would certainly...
Yes, buyback would be -- buyback at the time of coming with buyback, that tax incidence would be on the company and whoever participates won't be paying any capital gain. So that would be a slightly prudent way, but the tax incidence would be then falling on the company, which is currently when we are paying dividends, that is on your recipients, on your shareholders. So that will change going there. So that is -- again, we have cost on the company. As today, the tax incidence is on your investors.
So if we continue to maintain -- I can only say this much. If we continue to maintain a cash balance well in excess of INR 50 crores, which is the case right now, if that is the case, at the time of either an annual meeting or an AGM, depending on what the Board decides, we will get back to the shareholders with further details on how they plan to reward shareholders or at least distribute the excess cash, which cannot be used profitably by the company. I can't say more than that.
Sir, any update on the Liberty Chemicals and the Videojet part, sir?
Mr. Kapoor, I'm sorry to interrupt, sir. I would request you to please rejoin the queue. We have the next question from the line of Jayesh Gandhi. [Operator Instructions] We have the next question from the line of Jayesh Gandhi from Harshad Gandhi.
I have actually only one question. How many years are still left until we enjoy the tax advantage in Guwahati operations? Hello?
I have no idea. Jaideep, why don't you go on this?
Yes. Another 5 years to go.
Okay. And then we go straight back to 25% of tax or do we -- I mean, is it going to be gradual or how it will be?
Sir, we'll get back to you on this.
Okay.
I believe we'll have max credit available if it doesn't lapse before them? Because technically, we are at 0% tax right now, right? So technically, we would have a MAT credit available. I think, again, that's a fair point. We'll revert back to you if that's the case. But I think this question has been raised in the past. I believe we have a MAT credit, although we don't show it in our accounts. But we do have MAT credit available to us, which we can use in the future against taxes. So we can maybe maintain MAT rate for even post the next 5 years, even post 5 years.
Got it. So basically, at least for next 5 years, we hover around somewhere between 17% to 20%. Is it?
Yes, yes.
We have the next question from the line of Alisha Mahawla from Envision Capital.
So just wanted to understand the 400 [indiscernible], are we [indiscernible] anymore.
Ms Mahawla your voice is breaking. I would request you to kindly come in the network area, please?
Am I audible?
Yes, please proceed.
So I just wanted to know for the INR 400 crore revenue aspiration that the Board has set out, are we planning to do any more inorganic acquisitions?
So the Board has set out a INR 400 crores stand-alone revenue target. Definitely, we would be looking also at inorganic acquisitions, but that will not hopefully be part of this. So I think whatever ICIPL [ market ] or anyone else contributes is not part of this target. So this is been sort of a stand-alone target no us.
So it stands -- historically on stand-alone or this business's stream of mid- to high teen kind of growth and it is [ all ] locally marketed, but I think gaining market share is also not really easy and up for grabs. So what is inherently changing for [ your ] business? Is there some particular sectors doing well or being branched out into white spaces that you were not addressing earlier to aspire for growth, which -- it's been a while since the business, it seems?
So this specific thing is actually growth that happened within the last 2 to 3 years, but didn't show up because even though people bought printers and there was a growth, people are not using the printers to the full capacity because the demand for the -- our customers' customer -- like I said, our customer's customer might have been lacking. So a lot of our customers we're not producing at that capacity and now they're just using the machines more, and that's why we're getting -- we got more business specifically this quarter, maybe to some extent in the first 2 quarters also.
So it's not anything extra special from the market, it's just our customers producing more. And hopefully, one of the things that will help us is, which we discussed earlier, there were some cost increases and we are hopeful that we'll be able to push through a price increase of which is [ facing our fears for this resistance ] and that will help our revenues in the coming financial year.
And besides that, the non-CIJ market and the automation requirements of customers has increased. Because there are other things like tracking rates. There are things like holding on the outside cartons, warehouse management aspects. And people are looking at other areas also, and these are also contributing to growth. So yes, so I think that there are factors which are increasing the amount of coding required.
Like even right now, something happened with -- the government made it like [ into ] print all gram or per 100 ml -- I don't know what or something like that was the -- if you have a [ factor disc ] of 80 grams, if you print price per gram also -- like suddenly, there was a lot of requirements we were running around because you had to do this or bring the price for 100 ml or price per 100 grams or something, not just the price. So that just [ pays ] for like an additional demand. In [ our ] all cases, sometimes it can also cause a lot of additional problems because like it means a lot of extra work.
But -- so I think the -- fundamentally, the -- there has been some market share gains for us. But part of the bounce back that has happened because of people who are just using the printers less and they're just getting back to normal use. I wouldn't say it's normal use, I would say like it's still slightly less than optimal, but it's coming back there.
And is there a particular sector that is really firing for that, I know the [indiscernible] or has the sector of client concentration skewed in a different direction which is leading to this growth?
So I think before we were like a single jet engine where we worked very industrial-oriented, now I think the packaging sector, which would be food, which would include the [ cost ] only, like food will include all the sectors like dairy and beverage -- I mean a dairy and bakery and so on and so forth. But food, beverage, FMCG, personal care, which is always a stronghold of ours and pharmaceutical. So I think we're doing well in the packaging sector. We have increased our overall percentage of revenue from the packaging sector as a whole. And we continue to maintain our industrial sales and our market share there.
So I think by basically -- we're a little bit more broad-based in some sectors where we were quite weak, frankly. And like you said, we're still the #4 in the packaging sector between the 4 of us, but we are in a significantly better position than what we were before. So I think that has stabilized in our revenue and the growth.
So then just one last question. On the previous call also, you had mentioned that there is some high-cost inventory that will take to a bit -- to move out of the system and we are seeing some of that. So when do we think that margins will stabilize and some of these supply side issues, which have hit us, will be -- or we would have crossed [ check-in our stride ]?
Jaideep I think maybe you should answer this.
You mentioning about the supply chain issue, right?
Yes, yes.
See, overall, if you look at our cost of production, we are at a steady 40%, 44% -- 40% to 44% cost of product in all, which include manufacture [ winds ]. There exists some room for improvement definitely for us. But at the moment, we are really cut short because of this short supply of semiconductors and chips, and the margins are -- revisiting on the marginal basis because we are buying mostly from the spot market. Because our regular vendors, like they are having steep lead times, [ about ] 6 weeks or 52 weeks. So we are having a high level strategy to buy so that we don't run out of stock and make sure that sales will have a proper inventory to produce.
So we believe that the 60% gross margin and 25% EBITDA margins is sustainable?
Yes, I believe. In fact, we can definitely improve on that. I mean, if we increase our operations, there obviously will be economies of scales attached to it. So I mean if things have settled down in, let's say, 3 to 6 months' time, we would imagine improvement in our EBITDA levels well.
We have the next question from the line of Sunil Shah from Turtle Star.
Yes. I have just one question to ask, and this is about when we say the our installed base is 16,500 printers, those are active printers which give us revenue in one form or another, like consumables, spare, service? Is that the case? Or it has been the journey so far, how is it? Hello?
Yes. So I think if it's just 16,500 printers mentioned, then these are [indiscernible] printers because I think we would have sold more than that.
So what's the life of this printer, meaning when we say we have sold 800 printers in this quarter, how much would be like repeat customers and how much would be new customers? I just want to understand how are we expanding our market reach? So is it new customers or is it existing customers? How is it, out of those 800 sold in the quarter? Yes.
No, the majority of sales always repeat businesses because even in new [indiscernible] customer right? So whatever orders we [ disclose ] for 3 months, that comes in new. So even if you -- and most customers, what they do is they'll buy 2, 3 printers from us, even if it's a big company and they'll check it. And once they're comfortable, then we'll go in the bigger way. So they turn out as repeat customers in our books. But [indiscernible] so obviously, they are...
Sir, I'm sorry to interrupt. Sir, can you please repeat your last line as we are not able to hear you.
I'm sorry. I said we have been penetrating new segments as I have mentioned. So that's a better indication of probably that we are successful in creating fresh avenues of growth, fresh sources of revenue within the industry for ourselves. So I think the industrial segment, like I said, was always strong. And I think what's changed for us as a strategy in the last 2 to 3 years is that we've added a second engine of growth in the packaging sector. And, of course, the packaging sector [ is ] slightly more stable than the industrial sector. So that's also been -- have a second source of growth, but it's also like a stabilizing influence.
Sir, so just to understand this better in terms of what I was asking. So 16,500 printers are installed and 800 have got sold only in this quarter. So in that sense, I would believe that I'm expanding my market reach by 5% in this quarter. If 16,000 is my base and if I'm sold 800 more, which means I'm expanding it by 5%. However, that is not the case because as you stated, 800 is large number of repeat customers. So if the repeat customers are like, let's say, 640 out of 800, which means I'm expanding my market by only 1% in the quarter, is that the case? That's what I want to understand.
So I don't understand what you mean by expanding my market. So we look at it as a number of unique customers we have, and we look at it by the number of active printers that we have. So if we sold 800 printers, as you said, that would be an additional 5% of the existing rate what we installed, but that would increase. Of course, there will be also some of those 16,500 printers which would become like old and not be used anymore or some of those customers might go bankrupt or might shut that specific factory's operations. So some printers also go out to waste.
The printer has a life between 10 -- 8 to 12 years, and that's a fair judgment that people can [ take ]. So a printer sold in general will be 8 to 12 years of life unless that factory is not in operation anymore or that line is not being used anymore or nothing untoward happens. So for us, yes, the 800 printers would be an additional 5% increase in the base. But like I said, it would also be balanced with the fact that some printers would also have become old and -- for all industries in this [ period ].
So in terms of number of unique customers that we address, yes, that's a separate question that I don't think we disclose that information as yet, that we would measure out each in terms of number of unique customers that we address compared to before. I don't know if we've disclosed that as yet. So I can't give you that specific information right now. But there is...
Yes. Those [indiscernible].
[indiscernible] As in the past. When we would disclose the number of unique customers that we service in the past. I think we actually have it in our company profile presentation. But I don't think we have given it in our investor presentation anywhere. So I don't know if...
We can't give that information. And just Shiva, to add on what we discussed here, see, we do not even consider all these great printers or printers which we give it [ on the ] new business or on standard [ testing ] companies. So this 814 is not 5% of that. So that's what -- is the answer. So we have...
Right. I think that -- that's what exactly I was saying. 16,500 is the active base, 800 and whatever, is the additional base which would add to the 16,500. And of course, some of that 16,500 in the next 3 months would also not be used and that will be reduced. So it's not -- every printer sold is going to be used, but some printers also fall into disuse. So that's how you have to calculate our active installed base and our market reach.
So just to simply put, 16,500 printers have been sold, 800 we sold in the quarter. So we consider that in next quarter, it will be 17,300-odd printers sold from our side. But out of that we wouldn't know how many are active, et cetera, et cetera. Is that right?
No, no. There's some bit of correction, if you ask me. See, 16,500 plus is active installed base. So here, we are clearly ignoring anything which is on demo or testing purposes. So even if we sell, let's say, 17 -- say, 700 more, I won't add it automatically to the 16,500. Because that's our ever-evolving population of printers. Some of them might be returned, some of them might be converted, some of them might be dead. As of December, we've got about 16,500 active installed base.
So if I may explain to you more carefully, anyone who doesn't do business with us in 6 months, any printer that [ has not ] been done business with us in 6 months, is then considered as a dead printer and it goes off our installed base.
Great. Great.
Is that a finer answer for you? So [ if you have not done ] business with us in 6 months, you will not be part of the 16,500.
Right. Sir. So again, it's just repeating -- yes, so I'm just repeating what I have understood, 16,500 installed base is giving me revenue in one form or another in a 6-month basis. I -- to that, I'm adding around 800-odd printers in the quarter. So that again will perhaps give me more revenue going forward. Yes. So that's exactly what I was asking. It would be [indiscernible] correct, as you said?
But some of them will also not be used. And I don't know in this active investor presentation will be updated every quarter, every 6 months. So that is a thing that I will -- we'll have to get back to you on that.
Probably every year, and maybe we can update it much better.
Yes, yes. So we are -- it's like an automatic thing that happens for SAP, it's calculated. And we also have a target of every customer that hasn't bought. And of course, we get in touch with every customer who hasn't purchased for a month or 2 months, depending on their cycle. So all of these things are already programmed in. And it's -- but if someone has not purchased for 6 months, it is considered a not-active printer always for us. And then it would not come in this list of 16,500 certainly.
We have the next question from the line of Ashok Shah from LFC Securities.
Sir, as I understand, we have a property cut for the Liberty Chemical land. So still encroachment is not getting vacated or what's the problem? Can you just enlighten the situation?
Ashok. So the thing is, from my understanding, there's no basic change in the Liberty Chemicals Chandivali situation. But Mr. Kabra is directly handling that matter, so you'll have to do [ approach ] him directly on this. But my knowledge is that there is no major change in any direction.
But encroachment is vacated or still not clear? Matter is not clear.
The encroachment is not clear. If it was clear, we would have sold the land right now. But go to -- speak with Mr. Kabra on where on the encroachment status is.
And regarding this Videojet case, is that any other segment?
No, actually the case is exactly where it is because since COVID happened, there has been no court hearings, so it's just stagnant right now.
Okay. Sir, second question is regarding dividend. We are generally paying 2 dividends in a year. So as I understand, our -- [indiscernible] we have around 300,000 which are in physical mode, so these are going out of the -- we're making many of the dividends may not have been [ entered ]. So finally, this money going to the government or [ IEG ]. So is it better or it's better to take one buyback every year, a small buyback. So due to that, this money doesn't go the government and money would then to -- directed to shareholders who are actually a shareholder and not part of the IEOF fund?
So we discussed back in shareholder and dividend issue. In fact, [ Saket ], earlier had raised this question. So I think I have [indiscernible] and I said maybe if there is more than INR 50 crores in cash still, in 3 months from now or when the [ repayments ] happening, the Board will take a decision.
So that is...
So I don't know what the Board will decide. The Board has said that they will return any cash more than INR 50 crores if there is no acquisition or nothing happens to shareholders. And I -- we will take that decision in another quarter or the quarter after that. But the Board can only decide whether it's a buyback, whether it's a dividend, whether if you have some other policy that they do so I this is not my scope to answer you. So...
That is okay. Can you describe [ that ] out of the 300,000 share, which are in a physical format, how many division is [ interest ] for the [ shareholder ] or some dividend is not getting encashed?
I don't know. I know that good money goes in the IPF every year, but a very quick money reward. Please.
Sir what's the quantity of the sales which are not getting encashed dividend?
Yes, I think as we were [indiscernible] on this. Every year, we could deposit back into the IPF fund, that's for sure. But if you will stay for some time on the call, we'll get back to you with this answer.
So how many number of shares are [indiscernible] or shareholder are not encashing the dividend? That is my question.
Ashok. Jaideep is -- he's asking someone to find out. Maybe by the end of the call, we'll be able to give you an answer.
We have the next question from the line of Devanshu Sampat from Yes Securities.
I hope I'm audible.
Please proceed.
Yes. Yes, sir. 2 questions, one is on inventory, on books. What does this stand at currently?
I think it's about the same as the 3 quarter to half year for the -- about, approximately...
[indiscernible] is basically...
INR 67 crores.
INR 67 cores. Okay. And how much of this is because of the overstocking that we may be doing to meet the client demand or this is normalized?
Actually, overstocking, we are going to [ win methods of ] management. In order tie out the prices because of the shortages of semiconductor and the chips in the market, we are actually having a strategy to build up some stocks so that we not run off of the required raw materials for the production. So it's not a deliberate case of overstocking, but we are actually reacting, more of a reactionary measure, and being very risk-averse and conscious of the fact.
Got it. Got it. And sir, second question I wanted to ask is about how much of revenue do you think we would have lost this quarter because of supply-side issues?
I don't know how much we've lost specifically this quarter. But yes, it has been a bit continuous. I would say like in this -- you're at least maybe a couple of percent would have been at least more on [ dependent on ] supply, at least 2%, 3% more.
So we could have easily crossed the INR 80 crore mark, right, basically in this quarter had it not been for these issues?
No, I'm saying over the year, over the year. This quarter, we did 74, [indiscernible]? 74 [indiscernible]
Yes.
I think in this quarter, the demand from manufacturers are less than the first 2 quarters. So I can't see you on a quarter-to-quarter basis. But on an annual basis, I think you could have run 3% -- 2% to 3% more if didn't happen. This quarter, we got some of the stuff we had previously luckily, whatever we were able to manage -- but in the first 2 quarters, it's [ solely ] affected us more even in the previous year.
We have the next follow-up question from the line of Saket Kapoor from Kapoor & Company.
Yes. Sorry, I just got disconnected after. You were speaking about the MAT credit part. So if you could elaborate what were you trying to explain?
No, we just said -- Saket that we -- our 0% tax for Guwahati lasts for 5 more years. So for 5 more years, unless the government changes its policy, we should be under the MAT umbrella. At the end of 5 years, we will have a sizable MAT credit, which you can offset against future taxes. So we should hopefully be able to remain in the MAT umbrella for even some period post 5 years. But if -- this is not like something we have to obviously go through the auditor to give you a conform statement, so you can just take it as a guess, a best idea of the situation. I cannot say this with 100% confidence, we have to check with the auditor.
So Jaideep, do you have this advanced tax number as on 15 December, what has been our tax outgo, actual cash outgo we have paid?
Advance tax number, yes we have, it should be about -- the advance tax, this is something separate. But yes, it's about [ INR 8-odd crores ].
INR 8 crore we have paid.
Yes, yes.
As on 15 December?
No, 31 December. [indiscernible]
Okay noted. Advantage tax generally are paid before 15?
Yes. Also [indiscernible] indirect taxes, which you have.
INR 8 crores is it...
Nothing as receivable and payable as of now. We'll pay the dividend.
Correct, sir. Right, sir. And lastly, sir, on the JV part you were also explaining, the last one in the month of December. How is this going to benefit the company, the latest one? This JV, V Shapes have started [indiscernible], what are we eyeing through it?
So V Shapes is a company that makes some innovative -- those packaging solutions like around -- basically like a sort of high quality-type of sachet replacement but also like especially appealing part for us is that solution is normally innovative, but it's fully recyclable solution and there is also compostable option.
So it was a tie-up with -- we filled with our expertise and reach in the packaging industry, we could tie-up with them and take advantage of it and also combine some digital printing solutions of ours to service of certain customer needs out there. So yes, that's all...
There would you provide ...
Very early day. We just try to say that we are looking at other growth avenues and options also, which are related to the -- [ to grow our ] industry. And definitely, I do believe, in fact, there might be 1 or 2 press releases out on that matter. So it's -- we can try to put it out in the next quarter's presentation. We can maybe put an additional note on that if there is a demand for that.
And how much you have invested, sir, as of now?
So we've made a provision for a 10 crore joint venture. [indiscernible] I mean you revert back. Because right now, what's happening is we been incorporating our subsidiary and then V Shapes will then take equity in that subsidiary because first -- so Jaideep [ maybe better ] explain this exactly?
Yes sir please explain, please continue.
So are you talking about the V Shapes thing?
Yes, yes. Please explain the V Shapes transaction sir.
V Shapes, we've just signed the JV agreement, the company's cooperation is yet to take place. But overall we stand committed, as of now we will be enlisting about INR 10 crores in the initial franchise and 90% of the shareholding would be part -- would be our capital, which is a [indiscernible] risk capital, and passing as an overseas investor. As of now, we started like [ crystalize ] about the exact nature and when we are [indiscernible] it. But overall as for the JV agreement this is an overall thing. So INR 10 crores of initial phase and INR 5 crores later on. By virtue of [ difference ] share capital. [indiscernible] equity to you to do it. So it's INR 10 crores plus INR 5 crores...
So how is this INR 10 crores going to be accretive to us? [indiscernible]. What is the business plan for it? Hello?
Yes, I missed your last line.
Sir how is this INR 10 crore going to be accretive for us? What is the business plan? This is a large sum of money that we are contemplating to invest.
The business plan is that we are going to do a supply of this machinery in India, we're looking at that option. We also might look at the option of contract billing to be done over here. The machines have offer unique specialty, not -- I mean, in India, they've got some sort of foothold, but not majorly. They've also expanded to India. So we believe we -- we'll be the first players in the Indian market for such kind of machines.
And yes, so as of now, the business plan -- the [ full grown ] business plan is being developed. We've just signed a JV agreement. And once it is finalized, we will get to the goal, we very [indiscernible] and the incorporation of the company will happen.
Right sir. What Shiva sir has just explained sir, I think so much needs to be explained rather than only the statutory disclosure that we have done, the INR 10 crore part. And I think just Shiva sir please look into that further dissemination of information is provided for the size of the company, which we are, that INR 10 crore investment for this rising business and that potential which [indiscernible] is just articulating to is not very well explained to the investing community. I mean just a 2-figure submission as per the disclosure does not speak volume. So would be would request -- as you have told Shiva sir because -- a further press release or information of what exactly are these contemplating to do with V Shapes going in? Mam i've concluded.
We are trying to connect Mr. Shiva as his line has got disconnected. Please stay connected while I try to reconnect. CFO, sir, do you want to take this question?
I've -- the business potential and the type of machines where I would like Mr. Shiva Kabra handle it.
Sir, kindly stay connected while I try to reconnect.
I would like to -- whatever information I know, I will try to explain that. We would be into like supply of [ fill ] machines into the Indian market. We can also look into like contract filling like they are [indiscernible] for like filling up food, cosmetic, medical, chemicals into sachets or pouches. So that's all what I can tell you as of now.
Regarding the exact business plan, we have got it fully -- develop it. Once we develop it, we'll take it to our Board of directors. And then we'll take their approval and then incorporation of the company happens. But in case, sir, if you want to know about details, then we might wait for Mr. Shiva Kabra to join this line, and he will be able to answer.
I will wait mam. Please connect.
Kindly stay connected while we try to reconnect Mr. Shiva's line.
Ladies and gentlemen, the line of the management has been connected.
Shiva sir, please proceed.
Yes, I'm here. We got disconnected.
Sir, we have one more participant. Can we take him?
Absolutely.
We have the next question from the line of Harsh [indiscernible] and professional Investor.
Am I audible?
Yes, you are.
Okay. And so we saw that Control Print has been participating in conventions in Africa. And that is a very good thing to see. Can you talk more about it, about the expansion plans in the African market?
So Harsh, right now, it was just a exploratory thing. We were looking at actively about 2.5, 3 years ago, then post-COVID part, did not really focused on this. And as I described in some previous communications and we've had some supply chain-related issues. So it would not make sense to take on commitments that we can't be ready for our own markets and our own current requirements. So I think it's definitely something we're exploring. And as soon we take some definitive steps then we'll keep you posted on this.
Perfect. My next question is on our [ margins ]. So I think in the last quarter itself, you guys had mentioned that it takes to 3 to 4 quarters to pass on price increase to our customers. And most of the price increase for just like in July, August quarter of 2023, are we still in line with that? So my question is, this quarter our gross margin sank below 60% which is after a long time. So I'm wondering if this is the bottom of our gross margins?
So I just want to say one thing to everyone, I would request that all margins will be [ captured ] on a stand-alone basis, not on a consolidated basis for our subsidiaries. As of right now, there's no requirement for profitability, it's a [ gross ] that we won from them not -- there's enough scope to meet margins later as the revenues expand. So for our own gross margins, I think the JVs are the best expression of the -- it's like [indiscernible] especially. JV -- we've got some -- definitely got some increases that we've [ placed ] because of short supplies in our markets and we had to purchase several things from the spot market and it's not only the electronics and semiconductors but we obviously saw the maximum impact.
Also in certain things for the chemicals, certain specialties in the regions also not fluids. And still the overall we saw that there was a cost increase. And also we've seen beyond spot purchases, there has actual pricing increase in the price of semiconductors and electronics in general across the board. And then we did -- finally say that we are in the process of increasing the prices. We've started and some customers have accepted. And the bulk still have to accept it, but we are in that process. We are -- it's well underway.
And hopefully, that should at least cover all the cost increases that we have faced, genuine cost increases. And I would say that beyond just the cost of like spot purchases, there has also a little bit of depreciation of the rupee, I think against the dollar. And that had some impact maybe in the past. Because a lot of the things that come from some countries is also priced in dollars or benchmarked in dollar.
Makes sense. And lastly, I think when the line dropped off, you were explaining about your INR 10 crore investment in V Shapes. Maybe you can comment more on it, because the line dropped in the meanwhile. Were you [indiscernible] discussion?
So like I said, it's a unique thing. Obviously, being in the packaging industry, we have a close link with the packaging machinery business and the packaging materials business, but were not actually supplying packaging machines and materials, they're more on the printing aspect and the coding and marking business, [indiscernible]. We felt that there was something unique. And like I said, especially for us, what was interesting is not only that was a unique format, which had value addition or an innovative space, but also some of the solutions that are offered are recyclable and some of the solutions offered are [ compostable ]. And that's something we felt was also a market demand that was there.
So essentially, that's -- because we felt that there is a scope for something innovative, it's something that we should explore. And it's also an area where we could be strong.
But I just do want to say to people, because one of the previous participants did ask more details regarding our business plan, we would rather take high-risk opportunities but -- which are around us from a technology core, which is [indiscernible] and it's not a commoditized business. I think we've explained this in the past, and I'm sure we've done it again. So if we invest in the business, it's only something that we feel that there is some proprietary technology or there is a technology barrier and it is going to be at best an oligopoly or a monopoly. It's not only something where anyone can enter into that market.
And of course, when you go for a technology-based solution, there is always a much higher risk. I don't want to be [indiscernible] to everyone. So it's judgment call, we are moving with a business plan, but the risk is high.
[Operator Instructions] The next question from the line of Saket Kapoor from Kapoor and Company.
Sir I got the answer to the question about the V Shape investment, which we are doing currently. And only as investors, we wanted to understand the potential of what exactly V Shapes brings onboard for Control Print going ahead. Since INR 10 crore investment for a company of our size is a sizable investment, and as you articulated just to the previous question by Harsh, that if it's a high-risk opportunity but we're taking. So going ahead, just a fair understanding of what are we seeing and how is Control Print going to gel V Shapes going ahead? What kind of exclusivity or -- if an even elaborate and -- or a press release would have followed post your JV going ahead, that would have sufficed a lot of information -- just acquiring information -- only understanding.
I'm unable to visualize what are we trying to risk in V Shapes going ahead? That was my broader question.
So the -- I guess it's target of -- would be the [indiscernible] put out of, I think, a clear statement. I will put that - I think we've made all the statutory disclosures regards to the joint venture with V Shapes. Again, we're still in the process of doing some other legal proceedings of -- to incorporate subsidiary and -- a wholly-owned subsidiary then we have to incorporate, get some [indiscernible], some of the permissions so that V Shapes can enter and so on and so forth. And there's a technical aspect to where Jaideep can answer you.
But as the business -- fundamentally as a business, everyone knows in the coding and marking business, coding and marking, digital printing, with the packaging machinery and the packaging material business is a much bigger business. It is serviced mainly by people like [indiscernible] cosmo and so on -- Polyplex. And of course, on the machinery side with people like [indiscernible] or Nitron or Bosch like them, but a long them need print solutions, some of them innovative solutions.
We are not interested in anything which is commoditized. If we feel that there is some opportunity we could service the market, especially if it could be something that's environmentally friendly and sustainable, that's something that our Board will also encourage us to look at. And if we feel that we can find right types of innovative solutions in that space, which we believe could be a sustainable long-term business, we can look at that.
India also of course, we have talk with -- on some certain types of technologies and solutions, but maybe the willingness to pay actually a premium might not be that high. It's a risk always, but it's worth exploring. And of course, I can only say this much if we enter into a tie-up with any company, it's obviously on an exclusive long-term basis and obviously our lawyers and stuff are paid, and that they've done a good job to make sure that the business is clearly [indiscernible] and usually beneficial for both sides.
So yes, so like I said, we're not afraid of an investment. If it's something like our business, if it's something that we feel go the same sets of customers, and we feel that there is still more opportunities, positive. But like I said, it is going to be risky. There's always be risk in any type of new venture.
Only short point was, sir, when we are zero in the INR 10 crore investment, we have definitely looked at the business opportunities, the size which we could [ cater ] going ahead. And what I could Google out is V Shape is -- at least there is organization in that [indiscernible] strategy, product type. So definitely, we must have worked before committing an investment of INR 10 crores, we must have worked out the business opportunity. And as you mentioned that the disclosure which we are going to take exchanges only speak of our numbers and our contribution -- the stake which we going to end. Nothing more than that about the investment is towards.
It was my reason that's why I'm asking again and again. Just understanding where are we going to spend this money and how -- what kind of business opportunity of a company of a top line of INR 200 or INR 250 crores or INR 310 crores is going to garner from going ahead from the [indiscernible]. That was all my point.
So part of that money is to invest in working capital because you're selling this machinery, the materials that go in this machinery are proprietary. So you have to buy some of material from us that go into this machinery. And so we need to have those materials and those machineries accessible in India, so we can actually demonstrate, those same to our customers. So let's say the bulk of the investments is going to working capital. [indiscernible] inventory. [indiscernible]. We also -- setting up of contracts, [indiscernible] and other factory which will be used for specific customer requirements, especially in the initial phase where the product [ see ] prove in the market.
And what we're expecting is -- are we getting the feedback that a lot of customers [indiscernible], initial time for [indiscernible] or part of initial time of [indiscernible] for us. So it a try it before you buy it-type of a situation. As of right now.
So this business will be housed at [indiscernible]. I mean the entire business will be routed through the Indian domestic operations only. And there, they will be bringing the technology domestically for it.
Yes. So we already have some existing customers in India and maybe moving that customer base into our JV. But everything will be routed in through [indiscernible] all the machinery business, for the materials it's something that of course, we [ go ] manufacture ourselves. So we'll be sourcing it, it's a proprietary though and you will -- the customers have to approach that proprietary material from us, that is for the market.
And this customer with segment, [indiscernible] initially, sir? Where we are already merging the customer into which categories, we will showcase with V Shape products?
So the -- this market is the pharmaceutical market because the [indiscernible] is the highest, and that's the highest price of end products that they sell, and other 2 target markets would be some expensive cosmetics or -- and the third market will be certain types of foods which are reasonably high value. It could be jams, it could be [indiscernible].
And when will this conclusion happen? I think actually committed to when, sir, and when will we -- the money will be drawn?
So the process is already underway. We've already imported some machinery, we've already started working on it. But maybe some legal things that are going on in the background, like I said, the joint venture is being incorporated. There's some -- 3 Indian directors and certain shareholders and all of those things have happened in order to put an application for getting the foreign investment in. So listen, I don't know exactly how long it will take. Jaideep, do you want to give answer to this?
Yes. Yes, the first thing would be that we get of all information for the information of the company as you will be aware. Then the follow-up would be name approval and getting [indiscernible] passed on. It would take about a month or so for the company to incorporated to India and then we will go ahead with the rest of the procedures. So my guess is that in another 2, 3 months' of time, I mean, all the legal processes would be done .
So as of now, out of the INR 10 crores, how much exact cash have you spent, a ballpark number?
So as of now, the company is not incorporated.
So nothing has been spent as of now?
[indiscernible] adding a bank account then it's going to be subscribed then we will deposit the money. So as of now, the investment would have been done, that's part our investment.
And our as [indiscernible] of the theory sir there, we are in the mask segment currently? In your initial comment also you have not mentioned. [indiscernible] contribution there for the mask segment?
I missed some of the last line sir.
On the mask segment.
See, as you know, the mask business is basically a business based on how customers are fearing the COVID and that's the primary place of the business. So one of the fear factor remains and they're government mandate to keep the masks on in public places, then there is steady demand. As of now, because of the latest news of about the Chinese [indiscernible] variant, which were [indiscernible] in the month of December, we see that like in that god forbid nothing happens. But there is slight increase in the sales of masks at the moment.
And that will continue for December quarter?
I think we -- would be a marginal increase in this business. And this year, we would see some of [indiscernible] -- let's say INR 7 crores or INR 8 crores of top line.
And the entire asset is depreciated now.
Sorry, I'm not able to get you.
The entire asset has been depreciated, the depreciation benefit will have accrued completely.
Yes, it's in the process, it's in the process.
We hope to hear our future investment [indiscernible] part. And companion [indiscernible] very, very helpful.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Karan Bhatelia. Over to you, sir.
Thanks, Shiva and Jaideep, for a very detailed conference. Any closing remarks that you want to make?
I just think -- thanks to everyone this was a reasonably long call, but really happy that you people are taking a lot of detailed [indiscernible] all the questions you want to ask, it's been such an busy period for everyone, really appreciated. So if there's something that if, for whatever reason, sometimes I feel if these questions come on us and we are not prepared. If they feel that there are some questions that could be complicated, which are not covered in the investor presentation, then if people could email us, then we could actually get those answers ready and publish them in the call.
I would want to make sure that if there's a question which is relevant to the broader set of investors, then it would come on the investor presentation. So that's just my only request, if that -- because sometimes we don't have those numbers exactly in front of us and we don't want to provide incorrect piece of information to [ this kind of a call ]. I will be circulate quietly. That will not be correct.
And thanks, everyone, for coming. Look forward to seeing you again April, sometime.
Thank you, everybody, for the support you've placed in us. We look forward to meeting you in [indiscernible]. Thank you.
Thank you.
Thanks, Karan. Many thanks everyone.
Thanks.
On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.