Control Print Ltd
NSE:CONTROLPR
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
681.45
1 057.9
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Control Print Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Q4 FY '22 Earnings Conference Call of Control Print hosted by Asian Markets 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, Asian Markets Securities Limited. Thank you, and over to you, Mr. Bhatelia.
Ladies and gentlemen, good afternoon, and welcome all to the Control Print Limited 4Q and FY '22 Earnings Conference Call hosted by Asian Markets Securities Limited.
From the management side, we have with us Mr. Shiva Kabra, Joint Managing Director; and Mr. Rahul Khettry, CFO. I shall now hand over the call to Mr. Rahul for his opening remarks, post which we shall begin the Q&A session. Over to you, Rahul. Thank you.
Thank you, Karan. Welcome, everyone, to the fourth quarter financial year '22 earnings conference call of Control Print. I apologize for the rescheduling of the previous call, which had to be postponed due to unforeseen circumstances. We appreciate you all taking out time from your busy schedule to attend the call. Hope you and your loved ones are safe and healthy. Mr. Shiva Kabra, Joint Managing Director, joins me on this call. The detailed presentation has already been put up on the website as well as intimated to the stock exchanges.
Let me give a brief analysis of the financials for quarter 4 financial year '21/'22. The manufacturing activities in Q4 maintained a good momentum, and most of the industries increased their production to meet the high demand. The increased production was clearly visible in the higher requirement for consumables, which brought back the smile to the coating and marking industry. The last couple of years have seen extraordinary situations when the strength of the company is tested, and we can assure you that Control Print is geared up for any challenge. We are financially stable and robust, and will continue to perform in spite of the unforeseen challenges. This stability of Control Print has also been reaffirmed by credit rating agency, CRISIL, with an A rating after considering the short and medium-term impact of the COVID pandemic. Our investors can maintain their belief on the company's management for an optimistic future.
This quarter and annual performance delivered the best-ever result for Control Print. There was all-around growth in revenue, in margins and volume growth. These are encouraging signs, and the momentum should continue through the next financial year. Revenue for the quarter and annual was highest ever at INR 75.56 crores for the quarter and INR 254.26 crores for the year. The year-on-year growth in revenue is 23.7%, and for 12 months, growth is 24.8%. The reason for growth in revenue was due to good traction in consumables as the industrial production increased, though we believe it is still not at the optimum level and there is scope of improvement. The production of some of the industries was lower due to raw material shortages as there is still scope of growth in the overall production volumes. The gross margins were dented across industries due to increase in material prices of components, especially electronics, chemicals and solvents.
Active installed base crossed 15,000 marks, which is steadily increasing to grow the business in the coming years. Profit before exceptional items increased 19.8% year-on-year and increased 26.3% for 12 months. Profit before tax increased by 19.7% year-on-year and 41.7% for 12 months.
EBITDA increased 27.1% year-on-year and 24.5% for 12 months. We should continue to maintain EBITDA margins north of 24% on a long-term sustainable basis. PAT increased 21.6% year-on-year and 40.3% for 12 months. EPS increased by -- increased to 25.25% from 18.00%, which is up 40.27%. Working capital days improved by 31 days this financial year due to better inventory management and receivables recovery.
The company maintained healthy margins, with profit before exceptional items at 20.4% and EBITDA at 25.8%, with scope of improvement due to better product mix and higher revenue triggering economies of scale.
Let me brief you on the performance of various divisions, products and business segments. Printers and consumables had a positive demand, and the increased installed base will drive the business in the coming quarters. The company strengthened its market share in the building materials segment, and dairy and food sector witnessed continuous growth -- strengthening and growth. The pharmaceutical segment witnessed increasing customer penetration, wins in competitor accounts and focus to scale up in this industry. The SCP division witnessed 12-month growth of 17% as the production of the customers was increasing. The growth was mainly due to improved production of some of the industries where we have a stronghold like dairy, health care, steel and metals, food, FMCG, pipes, cable and wire, distillery, agrochemicals. And also -- and it was also encouraging to see growth in some of the upcoming sectors like pharma, plywood.
Product verticals of TIJ, TTO and Hi-Res continue to have a strong growth, and these products are well accepted by the market. We have dedicated managers and team to drive these verticals with focus on dairy, beverages, biscuits, frozen food, ready-to-eat, pharma, packaging, plywood, lubricants, [indiscernible] coding. These new products continue to grow every quarter, which builds confidence on the potential of these products in the coming years.
Laser business is growing steadily as product technology has been improved and the new team is driving the business. This has yielded good dividend, but with positive response from the customers and new opportunities expected in the coming quarters. Service revenue has shown good growth in value terms, which contributes towards profitability.
Our strategy for separate verticals for key account and OEM business for focused approach is showing encouraging results and should yield good quantum of business. LCP business reported good growth for the financial year, with revival in some cement accounts and PAN-India supplies in sugar industry. We are changing our focus to non-LCP business with some new applications, and the team is confident of generating business in the coming quarter.
With new government directives regarding marking and coding in agrochemical, health care, we expect some good contribution to our business growth and plastic bag [indiscernible. Customers, especially large business organizations, are looking for coding and marking solutions so as to avoid counterfeiting of their products. We are offering complete solutions, including availability of our in-house software development team to provide tailor-made solutions as per our customers' expectations.
To intensify our reach to the customers, we have strengthened our entire sales team for telecalling the customers to generate good quality leads. This is helping the field sales force to improve their strike rate for order conversion.
The company has strong cash flow and the trend is expected to continue. This year, we have performed well in every quarter, which shows a sustainable growth trend and the momentum is expected to continue for the next financial year with similar trend of growth trajectory. Fundamentally and inherently, the company remains strong, and we are focused on our plans and strategies as we are confident of the growth potential to deliver positive results.
The floor is now open for questions.
[Operator Instructions] The first question is from the line -- please give me a moment. The first question is from the line of Mr. [ Kaushik Mohan ] from [indiscernible] Financials.
Yes.
I started covering Control Print from past 1 day, but I'm sorry if I might be wrong. In past 5 years, I've seen a line item called as exceptional item or exploratory item in your balance sheet -- sorry, in your P&L. Can you please explain me this?
You mean the exceptional item?
Yes, yes. Every time I've seen from past 5, 6 years, am seeing these exceptional items in your P&L.
You see that in the last 2 years, it is at a very negligible amount. Even in the current quarter, it is only INR 26,000. The previous quarter, it is INR 11,000. Before that, it was INR 97,000.
I agree with that, sir. But why is this entry altogether coming? Because as a percentage of whatever the revenue, like, I'm very new for your business to understand. So I did understand what this line item is all meaning about, as well as in the -- when I go to the]indiscernible conference, I'm not understanding properly. Like, I see your [indiscernible] count, it is like profit or sale of an investment or something like that.
You can see that in note #5, we have specifically explained the exceptional items. It includes 0.26 lakhs for the quarter and 1 lakh for the full year towards changes in fair value of profit loss from sale of units in mutual fund routed through P&L. This is a very negligible amount which we had put in mutual fund, and that is coming. And there is an entry for the year of 315 lakhs, which was the sale of our Vasai property which we have declared, I think, in the first or the second quarter. That was an asset sale, so it came as an exceptional item. I don't think there is any other item which is of concern.
Okay. Sir, I just wanted to understand on the business trend. How your company has been -- like, now, currently -- according to my understanding, I feel that there is some growth value in the Control Print business. So how -- as a management, what is your guidance on to the future numbers? If not the numbers, at least the growth?
What is the guidance on growth?
Growth in terms how is the business....-
It's actually difficult to hear you clearly.
Am I audible now? .
Yes. Say it again, yes, please.
Yes. So as per your business growth, what is your business growth drivers for coming years? And like, what are you concentrating more on?
I mean, we don't really provide that type of guidance, in all honesty. But obviously, especially after this whole COVID incident, it's been difficult to answer. In the last few months, including the current period, we're really struggling with our supplies. So normally, especially the semiconductors, our chips are in real shortage and we're really struggling for it, paying a lot more. But -- so it's difficult to say.
But I think the -- obviously, as the market grows, we've always maintained -- that we would about double of GDP or industrial production, so the idea would be to grow consistently. And obviously, to some extent, we depend on the overall consumption of the -- in the market. There is a latent amount of things which are not being printed, and that's an additional boost for us. But the volume growth is going to come from [indiscernible] consumption growth. So if that's maintained, it's all going to bounce back and after this will COVID [indiscernible] and all of that, but it maintains. And [indiscernible], maybe we can do well.
Our product portfolio is strong. So we are expecting -- if we think the market is growing at like 1x to 1.5x GDP or industrial production, and we should do about twice of that.
Okay. Got the clarity.
Yes. So I think if the GDP growth is like 7% than industrial production in manufacturing growth, then we should do about 15%. So that's an approximate thing you can take.
But then it's going to depend on the overall economic growth because -- to that extent. So we -- if the economy grows at 7% to 8%, then we should do 14%, 15%.
The next question is from the line of Madhuchanda Dey from [ Metro ].
I have a couple of questions. The first is, you mentioned about an installed base of 15,000 now. So can we assume that on an average, the consumption of consumers will be 1 to 1.2 lakhs? Or is that a wrong assumption?
So roughly, that's a trend, assuming that the productions of the customers are normal. In the COVID year, definitely was lower. But in a normal year, your assumption is correct.
One to 1.2 lakh per annum will be the consumer base?
For the full year -- earlier, we had only the CIJ printers. Now, we have the TIJ, TTO, so some printers are higher and some are lower in their consumption. But yes, the CIJ at [ INR ] 11.2 crores -- lakh per printer is definitely.
And what about the new ones?
New ones are slightly lower, so they could be as much between [ INR ] 80,000 to 1 lakh or something. But since they are more new in the market, customers are also increasing their usage, we are hoping that this will also give us good revenues. But as of now, they're slightly lower in CIJ.
Okay. Some housekeeping questions. Normally, you share the breakup of the number of printers sold and the breakup between the new printers and the CIJ consumables, et cetera. So will it be possible to share it for the quarter and for the year?
Yes, sure. I do share that all the time.
So in this quarter, our printers is about 18% to 19%. Consumable share of revenue would be 51-, 52-odd percent. The spares would be around 8% to 9%. And spreads and service together, you can see about 22%, 23% and balances on demand.
And in terms of numbers, what were the numbers of -- a number of printer stores and the breakup between the CIJ and the new age printers?
So we generally give the total number of printers sold this financial year was 3,000 plus. We crossed 3,000 for the first time. We did about 3,025 in this financial year, in Q4...
And of which the new age one?
Sorry?
The new product? The TIJ, TTO?
So this is combined, so we don't give the breakup. The combined is about 3,000 plus, and in quarter 4, we've done about 900 odd printers.
Okay. Another question is on -- you mentioned about when you were mentioning pharma, you said that there were some market share gains also. So overall, if you look at the year gone by, FY '22, if you have done, say, a 24% kind of a top line, what would be approximately attributable to the market share gains? And where is your market share at this point in time?
The market share -- because the industry reports are not very easily available, we need to see the release of financials of our competitors, especially the larger ones which are filing. Then, only we will be able to give more details on how the industry has grown.
But I think what we hear from our field staff and the momentum that Control Print is growing at 20-plus percent. We feel that we would have gained market share, but we'll have to wait for our competitors to file the results.
Okay. Because you mentioned about the -- obviously, there's a direct linkage with the manufacturing activity. But the top line growth could also be propelled by market share gains, if that is a trend that you are witnessing, right?
Yes, we are -- we feel that there would be a market share gain because we've opened up more industries. The product range has increased, and we are able to penetrate into competitor accounts. So we would like to see our market share increase once the results of other companies are released.
Is there a pricing advantage of Control Print vis-a-vis the large 2 competition, or the [indiscernible] competition?
We are competitive. We don't really undercut or try to gain market share through pricing. But yes, technology, service and being competitive is definitely one of our [indiscernible].
I think Control Print has always maintained that service is our strength, and we reach that out to our customers and try to give them the maximum uptime, and that's what is building the confidence on our customers. Of course, price has to be competitive in the Indian market. But that's not our only advantage.
Okay. And the last question, if I may, is as you step into FY '22 what are the main worries?
Sorry to interrupt. I'll just repeat exactly what Rahul is saying.
So I think overall, our pricing is not cheaper than our competitors. The idea is to be at the same level. Case to case, sometimes they are cheaper, sometimes we are cheaper. It, of course, depends on deal to deal. But overall, on our average price level, the idea is to be at the same level as the competition, as the leading competitors. And we offer better value because we think our technology and our product range is better. And of course, we have the best service network and good logistics in place offshore. So that's more what we are focusing on offering the customer.
Price-wise, we don't really undercut, yes. Sorry for all that, now that you can just ask your question, so -- because.
Yes. I also had a question about as you step into FY '23, what are the main worries that you have?
What are the main?
Worries, worries. Concern, worries, challenges?
I mean, right now, of course, a key issue for sure is that we are having a massive amount of issues with the chips, supply of our chips and semiconductors, so we're having a lot of production-related issues. And we have bought a lot of things from the spot market and at a much higher price in the last quarter, and this -- it's continuing. So this is definitely affecting us. It's slowing down the entire logistics chain for us and the manufacturing is being affected of the printers, which then -- yes. It has increased our lead time to supply the printers from ex-stock to definitely like a few weeks at least.
And so -- it doesn't look like this thing is easing up anytime soon for us, so this is definitely an area of concern. Like -- and this is what I say, it remains an area of concern in the coming year. But otherwise, I think we are okay. But this has to be resolved somehow.
And just one question, I'm just picking your brain on this. From a medium to long-term perspective, is there any technological disruption possible that could weaken the investment case for a company like yours?
I think, obviously, the biggest risk to me is that the statutory risk, the government can always change laws. So obviously, I'd say, like 50%, 60% of the customers are printing because of the government regulations because you require the date code, the batch code and all this other stuff. So of course, the government regulations change, and they require the less ink or that thing.
But we don't think that this will be changing. But at the end of the day, that's been a big driver going forward, increased traceability requirements and fees and rent because -- but yes, technically, it can happen.
Technology-wise, I don't see any issue because I think that people always want to see this type of information on their packs. And we cover all the major technology which are applied. So whether you want to -- like you said, use a CIJ or a TTO or a laser or a Thermal Inkjet or piezo. We still need to buy it from [ mobile ] or something, so -- yes. So whether you want an SUV or a passenger car or utility vehicle, the top thing is you just need a car for transport, and we are there for that.
Next question is from Deepan Shankar from Trustline PMS.
Congrats for a good set of numbers. Rahul, we first
want to understand this contribution of the segment for full year, printer, consumables and other segments.
I just gave that in the previous --
No, it was for Q4, right?
Yes. You want for the full year, you think?
Full year, yes, yes.
So it's quite similar, I'll be honest. I have the figures, but the percentage is quite similar for the full year as well as Q4. So I don't think there's any -- digit variation.
Okay. Okay.
And in terms of printer capacity utilization, what is the rate currently now?
Printers right now, we are at about 80%, 85%. But like Shiva mentioned that chip is the main concern right now. If we can get all the parts availability, we can ramp up the production even more because it's more of an assembly plant and we don't see that as a major bottleneck.
So going forward, even if more printers are required in any particular year, we can surely ramp up our shift production.
Okay. Okay.
And in terms of non-CIJ contribution, so what is that for full year?
Non-CIJ is definitely increasing. Earlier, it was in single digits. Now, it has definitely crossed. I mean, as these were new product that is TIJ, TTO and Hi-Res. But it's completely not TIJ you're talking about, then it will be about 30%, 35% in that range.
Okay. Okay. So this newer one, TTO?
Sorry?
Okay, [ term ] check later.
So just wanted to check -- so how is our segment penetration improving in the food and beverages segment where the FMCG had a really good hold, right? So are we able to penetrate now better in this food and beverages segment?
So to some extent, in 1 or 2 segments like dairy and stuff, we've been focusing more on, and pharmaceutical not across the board. But I'll say again, in the last 2 years, we've troubled a lot because of COVID. It's not been easy to meet customers, so people have been focusing more on the existing things. We have gained a good amount of business from specific customers who have had larger requirements, but yes, I mean, we've got a definitely improving mix coming from the FMCG segment as a whole in food, beverage, pharma and consumer package goods, so it's improved.
And I think in that -- what I said that you can segments where we follow a good gain. I think food and -- yes just taken. And now, we are going on -- want the solution providing going forward, so we'll see how that panswer out for us.
Okay. Okay.
So now economy being back in action and more production is happening, so do we accept consumables contribution increasing over next 2 to 3 years?
I mean, I think -- like I said, our overall growth, we are targeting about 2x manufacturing growth or you can take it as industrial production or GDP like -- substitutes for that. So obviously, if the -- in the end of the consumers, all depends on the production. I cannot predict. Obviously, if people are adding all lines with more capacity or they're selling more, then they will print more.
So it's a depending thing, there's nothing we can control because that one time it's a printer to someone and it depends on how much he is producing [indiscernible] like on a corporate basis, right, like we get a couple amount of things, so it all depends. Assuming that consumption increases, then production will increase. If production increases, then yes, definitely we'll print more. And we'll also get the advantage of printing on some applications, which maybe were not being printed before, so that's a continuous increase that's there.
Next question is from Saket Kapoor from Kapoor Companies.
As could be seen that we have posted the highest revenue on a quarterly basis and also on a yearly basis. So we are now [indiscernible] the first quarter. So was it a seasonality effect for the March quarter, or the momentum still continues since the base has now increased and it is now the consumables that will be driving our profitability going forward?
I think even in Q1, of course, April is sometimes a subdued month because people have probably overworked in March. So I think overall, Q1 should be fine, Saket. It should not be a concern. But Q1 has always been good for us historically, and we see that the momentum of Q4 is also going to continue in Q1.
Yes.
Sir, on the consumable part, what should be our utilization level?
What should be our utilization level?
Yes, sir.
So, again, it is increasing. The volume growth is there in consumables, so now we are 50% to 55% is where we are right now. We had earlier less than 50%, now, we've crossed 50%.
Okay. So sir --
Enough capacity for future.
I didn't get it, sir. Last --
Enough capacity for the next 2 years, 3 years.
Yes, yes. Right.
And sir, about the mass division, sir, what would be the now -- going forward, the business plan? I asked for demand division currently, sir. We have claimed the depreciation part -- completely depreciated the asset for this year, and what's the road map ahead, sir?
[ Mask ], obviously, is depending. Sometimes the wave comes and all that, so we hope that there is no more wave because coding and marking is more important to us than the [ mask ] division, and that is not something that we would focus on. .
Depreciation, yes, by the end of the year, most of the machinery should get depreciated. So [ mask ] will not be the driving force in this financial year for sure. Though we -- on a long-term basis, we already have the FDA approval. And once things are more normal globally, we will see if we can look for some good export opportunities for [ mask ]. But as of now, the focus will remain on the coding and marking.
Okay. But still, sir, it is operating at optimum level? The type of turnover, the percentage of mix will remain the same for this year also?
No, I think it'll definitely -- coding and marking will be high. Mask will not be at the same level as last year.
Correct, sir. And sir, about the introduction of this new printers, I think the 2 of them were introduced also, and we were also planning for the new model of internet of -- I think property into that. So where are we in midst of that launch, sir? And --
To be honest, this was supposed to be have launched in the -- towards the end of the last financial year. But like Mr. Shiva mentioned, globally, the challenges of chip and micro conductors is affecting us also and our partners in Germany. So the suppliers who have confirmed orders are defaulting and delaying the supply.
So we have already geared up. We've purchased most of the components for the new launch of the printer. The training has been given to our factory in Nalagarh. And we're just hoping that we will be able to force the growth quickly. And once that is done, we should be able to launch. So next month or the month after that, hopefully, we will be giving some announcements on the launch of that printer.
And sir, we can be getting to any specific industry? Or which industry will the printers be aligned?
So this will be our new CIJ printer. The technology is changing, so the old printer will get replaced by this new printer. Industry will be the same, but the customers will get higher-end printer with more applications and more things like the Industry 4.0 or IoT, whatever you can talk. Those features are there in this printer.
And the price point?
These will remain the same, applications will be the same, but they will get more features in their printer.
And price point also, sir, it will be significantly higher than what the selling price was? And what would be the expected price?
We will decide that when we launch the printer, then we will take a call on price strategy.
The 2 P&L items, sir. This quarter, we have booked in other income of INR 1.57 crores, and as employee benefit expenses have gone up quarter-on-quarter also year-on-year. So is it -- the employee benefit conclude to be a [ KMP] contribution, M&A -- contribution towards [KMP], the profit percentage or anything else?
So the other income is basically the dividend income, which we received on our investment portfolio that is reflected in other income. And employee core benefit, what we need to keep our employees and their incentives also because sales are increasing, so incentives are being distributed more. As well as we need to have a bench trend for our future business. So yes, this will -- at this level, I think it will continue.
Okay. So we can look at a quarterly run rate of INR 15 crores now?
Around that. But if you see as a percentage, it is coming down. What we were 2 years back, it's around 20%, 21%. Now, we are down to about 19%, 19.5%. So with increase of sales, I think we'll be able to absorb these employee benefits better. But it's required because it's -- we have 750-plus [ sales ] and team now, so we have to retain the employee and they are important for our business.
Last 2 points, sir. On the question of the Innovative acquisitions which we have done, how are things going ahead there? And on the Sri Lankan write-off part? These two...
[indiscernible] It's a newer company, so they've really grown in the last year after Control Print came in. And we are -- we had our recent board meeting, and we're quite optimistic this financial year also will see it grow to 3x. We're quite confident because that business is -- and it will continue to grow for the next 2 years is what our belief is, that's why we invested in innovative. So though it is not significant to our balance sheet size right now. But maybe a couple of years down the line, it will be a good contributor. We're quite confident of Innovative.
Sri Lanka, you know that the country, the economy, the political scenario, everything is under such a turmoil. And there is, to be honest, no visibility going forward, how they're going to come out of this situation. Considering that the Board has decided that we should try to wind up the operations and see what regulatory requirements are there in that country. So that process, we will be taking up in the next couple of months.
And what has been our investment in the...?
So we will take a full -- like I said, we need to ascertain all the details regarding how much is the inventory there, how much is the receivables. We also have -- to be honest, last few months, we have certain funds which are lying in our current account in Sri Lankan rupees. But even though I've personally visited the bank a couple of months back, the bankers are not able to transfer it to India in U.S. dollars, because the biggest challenge is the foreign currency is not available. So we have to ascertain everything and then see how to wind it up. As of now, it's only last week that the Board has given to go ahead. So give us some time to work out.
Yes, that is very correct, sir. But I just wanted to understand what percentage of business have we done for last year then from the Sri Lankan? So is it any substantial, or?
No, I don't think. I don't think. It's not -- it's not been substantial, which will affect the Indian balance sheet.
Correct, sir. All the best to the team, sir. And I hope this momentum continues and for plant -- a plant visit also, sir, if things are to be coordinated, the investors if...
We'll let you know that part.
Thank you for your good wishes.
Next question is from Devanshu Sampat from Yes Securities.
My first question is, so your printer sales in FY '22, they are just up about 2%, right, on a Y-o-Y basis?
Printer sales, volume term?
Yes. Is that correct? 3,025 this year versus 2,952 to last year?
I actually have it for the quarter. It was about 80%, to be honest.
You mentioned we saw --
If you take only the new printers, we have new and direct made. The new printers have grown about 7%, to be honest. That's the figure I've worked out. So that is encouraging because the customers are still buying the new printers.
As of now, to be honest, the situation is on our side that we are not able to -- we have a backlog, like Mr. Shiva mentioned, that the chips are in shortage. So this would have definitely been higher. We could have done a -- maybe a few more printers and the percentage would have been higher.
So this is what I -- essentially be an industry-wide issue, right? So would you have lost market share over here? Or would we have gained, or how do --
We've not had, like, not had anything major as of now. Of course, there's a shortage across our competitors also. So we've not canceled any order or lost anything. It's just that there is the backlog earlier. We were supplying the printers faster once we receive the order. Now, there is a slight backlog, which -- but it has not led to cancellation.
Right now, it has impacted more on the cost because for the last few months, we've been paying a lot more money for our parts because we have to source it from the spot market to continue production, and the situation has, honestly, only been getting worse. So the types of backlogs that are there right now from the order which we already been like even long ago are unacceptable.
So yes, we are managing by paying a price, but it's obviously not fast.
So how do you define installed base? Last 6 years, still?
How do we?
How do you define installed base? Like, 15,000 printers that you're saying you have installed base? So how do you define that?
We'll take it more on the active printers. Customers who are buying consumables or doing some service or some -- where they are -- we're in touch with them over the year. So that's what we call active installed.
And over the year, it's much more than 15,000, but like, we always mentioned that you lose some customers, some printers go out of operation. More or less, we feel that about 15,000 printers will be active with our customers.
Okay. Okay.
And can you give a sense on what the number -- what your printer numbers could have been if you would have been able to sell -- I mean, if you -- if there was no shortage of...?
It's not a major backlog, but we could have added another maybe 7,500 printers in the March figures.
Again, just to clarify, the shortage is mostly on the CIJ printers. It's not like all our printers are in shortage. It's the CIJ wise, there is -- exactly is our main focus all the time. But all the other range of printers, we are still able to supply. There is no great shortage.
Okay. Okay.
And sir, in your cash flow statement, there's a profit on sale of fixed assets of INR 3 crores. Can you let me know what that is [indiscernible]?
Because In Q1, we have mentioned it, our Vasai property in Maharashtra, that is the one which we sold this year. But then if we are not doing anything concrete there, so we liquidated that.
Okay. Okay.
So congrats to the team for bringing the [indiscernible] level below 100, which has been a long request. I think, a appraising point for the company as well. But you've also been mentioning that there will come a point when after which inventory levels, they would not need to -- we won't need a higher level of inventory. So would it be fair to say that the INR 65 crores, INR 70 crore range is a good number to work with as inventory levels in absolute terms going ahead?
I think these are sustainable inventory. I would have said that this can come down a little more. But considering the current situation where we are transiting from 1 printer to the other and there is shortages. Like I mentioned, we bought the part for the new printer, but we just don't have to go for. Inventory has gone up by a few crores, which if we had the Board, maybe that would have been sold out.
But considering -- I think, definitely, INR 70 crores -- should not cross INR 70 crore. INR 65 crores, INR 70 crores is a good range. But once the new printers launch and things are more stable, this can be worked on. So if you would take it as a percentage of sales or number of days of sales, with sales increasing, this should continuously come down. We've always mentioned that we had to maintain critical spread, which don't need to be added all the time. So that is giving us dividend now, where you can --
Once these problems are resolved, you're saying another INR 5 crore, INR 10 crore inventory, we can still release some [indiscernible] over a 2-year, 3-year period?
Yes, I think so. Again, it all depends on what sales is at that level, but it's -- I think now, it is at a much more optimum level than it was a few years ago.
Okay, sir. And what's your -- any planned CapEx for the year?
Just like maintenance things, I think.
Okay. Okay.
So sir, just -- we've been -- I have raised this question a bunch of times in the past. So in one of the calls, also Mr. Kabra also had assured that whenever there is no cash requirement, we'll definitely pay it out. And the payout ratio of -- for the dividend has increased in absolute terms, where the payout ratio has come down to about 37% from about 40%, 45% levels in the last 2 years. And of course, the cash is piling up. So can you -- what is the management or the Board's view on this in terms of the reason for a lower payout or -- and managing the cash or cash allocation basically? If you can just give a sense on that?
So I think right now, it's just a matter of having more firepower available in case there are options available for inorganic growth is what I'd see, or maybe potentially larger investment opportunities. So as you said, we are doing well and we're focused on our core business, and we're looking more at getting into more solution within -- integrated solutions is what we are looking at providing around our supporting and marketing ways, and maybe also looking at certain opportunities in close the allied businesses. So I think that was the main reason.
But of course, if we don't find the right type of opportunity, then even we will reward the shareholders in coming time. I mean, either way, we'll reward the shareholder. I will expand the business task to find the right opportunity, which is the right type of risk-reward profile or -- of course, either we'll return the money in terms of a buyback or dividend or sort of [indiscernible].
So is there an outer limit in terms of time limit that we can -- should be -- we should essentially wait for until you can decide on this or announce something to do with this?
I don't think there's anything specific level that -- it has been discussed in past, but I do think that maybe if there's nothing that happens in this financial year -- in the current financial year, I'm sure we'll do something towards the back end of this year or in the next financial year.
We're generating cash. And of course, we're paying dividends, and so we are seeing [indiscernible] there. Like I said, if we don't see anything concrete, we will definitely, like I said, reward -- look at not holding too much cash beyond what's needed. But I can't give you the exact specific numbers, because that's something we'll discuss with the Board, and we'll get back to you.
I do say that we do have the AGM schedule, most likely in July and -- if this -- that's definitely a time where any person can also raise this question with the entire Board, of Q1 results and of [indiscernible] time to check with Board for that.
The next question is from Shalabh Agarwal from Snowball Capital.
So it would be interesting to see some of the marquee names in the FMCG space in the presentation. So wanted to check, how easy or difficult it is to make inroads into these companies? Because as traditionally, these companies have been served by more immense vendors. I'm talking about Unilever, ICT or Marico, or some of these names that figure in your presentation.
So I don't think that the issue for us has not been the rising -- we've been in a lot of consumer goods companies like, Unilever, Marico, Emami, whatever. So we've actually been supplying a lot of consumer goods, life care, home care companies. We've traditionally been more weak in the food and beverage space rather than these 2 sectors, and of course, in pharmaceutical also, see we are much less.
So I think the issue is that maybe -- of course, it's going to require dedicated focus to win more market share from these companies, so there is more effort that has to be made. There's no doubt. It's definitely more work to get competitors optimal than to sell more to your existing customer or even for -- as compared to a new customer who has not been using anyone. So there's no doubt about that. But, I mean, we've got our strengths, and we are focused on explaining those to our competitor, customers also, and hopefully, they see some value in that.
But I think, like I said, it's not like our market share gains are not very dynamic in that type of situation, anywhere from 18% to 40% of the market or 30% or something. It's a few -- 2%, 3% a year, 1% to 3% a year is the growth in the number of our market share, 1% to 3% what I'd say. So that's the type of situation that's there because once someone has a printer, it's got a life of 7 to 10 years. And during that time, unless there's some real major issues, we're not really looking at replacement of that equipment.
So some of these majors will be having both consumer business as well as they would have presence in the food business where probably, we are not -- we have a lower presence. So being present in the consumer division, does that give us a leeway or does that help us to take up and put inside the food division business, which might be a different factory at a different location?
So I think that -- only I think Unilever is the only big one that I know that has a consumer --
Yes, ITC also.
And the food also, that's not a thing. We are printing on those things. But that's one customer. I'm talking from an overall basis. So most companies are like food companies. Most companies are beverage companies, they beverage companies, and most companies are FMCG or personal care companies so these are personal care companies.
So there has been very up like if you take an personal care, we are actually doing fine traditionally, but we've not been as successful in food and beverage and pharmaceutical. So we are working on increasing our market share, and we have got some penetration, but like I said, it's from a low base. It will take time to build up. But we're not looking at it as a 1-year thing. We're looking at this over a 2, 3 -- like a 3- to 5-year horizon.
Sure, sure.
And sir, in replying to one of the earlier questions, [indiscernible] said that we may be launching the upgraded version of CIJ with internet update. So when we launch an updated printer, how does it work? The customers, do they buy or we have to buy back their earlier printer? How does that work?
Yes. So normally, when we launch a new printer, generally, it has some advantages or some improvements over the existing printers. So there might be some differences also in terms of like a different ink bottle, for example, or ink system. It might not work exactly with the old printers, it might be ink series.
When each customer will decide whether you want to continue with the older printer generation or the new printer generation. And the tendency is normally, people purchase this when they have new requirements. And at the point when they have new requirements, that's when they tend to purchase the new printer and slowly sort of migrate over a few years from the current generation to the new generation.
So people are not going to like -- I've launched a new printer, and I'll say, like, I have like 18 printers and I'm going to replace them all with the new printer. That's not the way it works. They will go for a phased replacement, so they have to [indiscernible] between 2, 3 new lines. They will buy printer, they will evaluate it slowly as they feel that the older printers are -- other -- older generation of printers are aging, they might slowly phase them out and replace with the newer printers. So people will not -- it's not like a wholesale replacement for sure.
Sure. So when the older printers are replaced, so these printers, do we buy them back? Or they are like scraped, or how does that go?
Largely just scraped.
What happen in most companies, they are assets. So -- so we are not really that interested in taking our old printer and doing all sorts of [ RN ] unit because a lot of the hydraulics and -- this thing is difficult to recycle. You'll have to make like an entire new set of parts for that. Because...
We don't really buyback anything.
Yes. So the tendency is more, if you buy new equipment, you have the old equipment, you do it. And yes, sometimes, if you want to offer a little bit of a discount, we do it in the form of buyback or something. But the basic focus is more on -- you want a new printer, you buy the new printer and what you do with old printer is your issue.
A little bit more pressure on that now because of recyclability and all that, so we are working more with our customers and offering them solutions for how to recycle the electronic waste and -- yes. On the software issue. So we are doing that also, yes. Plastic, yes.
So we're working on that part actively?
Yes, definitely.
[Operator Instructions] Next question is from [indiscernible] from [indiscernible] Associate.
Congrats on a decent set of numbers.
Sir, I just want your view on total market opportunities. I guess currently, it is around INR 1,400 crores to INR 1,500 crores. So is there a scope to venture into some adjacent categories like tracking and testing the technology, or maybe some other verticals? Or maybe show some inorganic growth? So just want to know your view on this.
Yes. I think we are definitely working down the solutions part, and we work some concrete plans in place. We already offer track and trace solutions. So right now, [indiscernible] is being used by the pharmaceutical industry. We feel there's opportunities also outside of the pharmaceutical industry in coming times, but yes, we're already offering that. But what we want to do is make that more of a solution platform, and we also had a few other solution platforms that we are working on.
On top of that, of course, we need to like, again, like the new traceability and of course, counterfeiting, anti-counterfeiting, and these are big issues for companies, branding and stuff like that. So we're working on specific solutions based for the customer. But as far as inorganic opportunities grow, I think like -- and organic opportunities, we're looking at that. There are a lot of adjacencies where we are, because they're right in the cross between the printing industry -- the digital printing industry and the packaging industry. So there are many different areas where we can go at.
So we are trying to understand what are the things we can do. So we are actually -- definitely want to get more deeper into the printing part of things, and we are. And we're also looking at getting more into the integrated solutions part where our printers and our key technologies used for delivering specific solutions to customers like anti-counterfeiting, like traceability and new track and trace, inventory control, logistics management and stuff like that. So we are -- it's a bit of a journey also that we have to take to get to that level because it's a [indiscernible] of mentality from a product box setting company to solutions-based approach without losing the core focus, and the tax we are having in the current market. So it's a -- will be a transition.
Okay. So sir, but in the medium term, that is, say, over the next 3 to 5 years, where do you see the overall opportunity size? Like, let us presume that you venture out successfully in a few of the adjacencies. So over next 3 to 5 years, do you see this size from INR 1500, INR 300 crore to maybe 1.5x or maybe 2x of current opportunity?
Yes. So I think right now, what I would say is that the market would grow at about 1x to 1.5x manufacturing growth. So if you say GDP is about 7%, you can expect the market to grow at 8%. 6%, 7% [ EV ] growth in the market might be growing at 8% to 10%, and we should do operate faster than the market. That's for the coding and marking business.
As far as the other things go, like I said, we are getting into, we have started doing some track-and-trace solutions for customers. And obviously, these are big markets, big solutions. But for us, still a new area because we're not traditionally -- we're providing the entire solution traditionally. We tied up with other people and we usually providing our printer as part of the solution that they are giving. But of course, the market opportunity is much bigger because we start looking at software opportunities, are looking at automation and integration opportunities. We are also looking at inventory control and branding counterfeiting and those are, like, things that directly impact the business in a large way.
So obviously, the budgetary amounts for those businesses are much larger. But -- on that front. And then when we are delivering something concrete and making a strong business case for customers in certain areas, then I'd like to answer that question at that time. Otherwise, with respect -- on my thought. But definitely strong from our side to move into those areas. Like you said, if we successfully move and the market is big, let us prove that we are successful. Let us focus on that right now.
Okay. All the very best for the future.
Next question is from Anurag Patil from Roha Asset Manager.
Sir, last 4 quarters, your gross margins have been kind of declining. So can you elaborate what is the sustainable number there? And what is the current raw material pricing scenario?
So definitely, like I mentioned, the gross margins are under strain, and that you would know that is across industries. It's not only about coding and marking. Commodity prices of everything, including electronic, chemicals, solvents have definitely gone up. We have passed on some of the price increase to our customers, but it's a slow process. We have to first pay our suppliers and always a challenge to get it from customers.
So the process is on. Hopefully, in this financial year, if the price increases are more stable and we are able to get from our customers, you will see the gross margins improve. There is -- in a stable period, definitely another 2% to 3% is something we can definitely pull back. But as of now, the situation is not stable.
The semiconductor market, like Mr. Shiva mentioned, is -- is we have to continuously buy on spot market to keep the production running, so that is something which is not in control.
Okay, sir. Fair enough.
And sir, we have acquired one company a couple of quarters ago. So that time, you have mentioned it's more of a lower end kind of printers that company manufactures. So can you just tell what was the revenue contribution from that company this year? And if it increases, can it be -- [ create ] our gross margins because it's a lower-end product?
Like I mentioned to one of the earlier questions, right now, it is not significant. It's a new company, less than a year that Control Print has invested. But it is definitely -- we are happy with the progress that we are making, approaching the customers. Many of our printers are also now installed. Like I said, that we are also struggling through supply of printer and the business only comes in when we get consumables on the printers, which are installed. Similar to what we are talking about now in Control Print. As the installed base increases, the consumables starts driving the business.
So that is at a very nascent stage. Maybe we'll have to give it at least 2 to 3 years before it starts showing on the Control Print balance sheet. But we feel that this year and the next year, they have good growth potential, and we're confident that the business will grow.
Next question is from Karan Bhatelia from Asian Markets Securities Private Limited. Please go ahead, sir.
Congratulations for the very good set of numbers.
But I'll -- just wanted to have some clarity on this. So we have this technological arrangement with KBA Germany. So when will be the expiring, and when are we up for renegotiation?
I think it's valid until 2023. December '26 -- it's definitely, I think that until December '26. Post that, we need to again do [indiscernible]. We do have the clause that we can extend it for another 5 years just by mutual consent.
Okay. Okay. So before this
[indiscernible]. We've been there for more than a decade in partnership, and I don't see there should be an issue in extending their contracts. But we have proceed closer to that date.
Right, right. And given the fact that the selling price of Indian printers is slightly less compared to the global peers. So going ahead, can we expect even better order uptake from KBA Germany or the global markets?
We have geographical restrictions in our contract. So our focus will be India and the Asian market. They will take care of
[Technical Difficulty]
Ladies and gentlemen, the management line is -- please give me a moment. Ladies and gentlemen, we have Mr. Shiva Kabra still connected. The line of Mr. Karan has been disconnected. Just give me a moment, let me just quickly reconnect.
[Technical Difficulty]
Ladies and gentlemen, Mr. Karan Bhatelia is reconnected. Mr. Karan Bhatelia, please go ahead.
Yes, that is my question. Any follow-ups you can see on the screen? Or consulting or any closing comments that you can make?
[Technical Difficulty]
Mr. Bhatelia, the management line is disconnected. Let me just quickly connect the management. Please give me a moment.
Ladies and gentlemen, the management line is reconnected. Just give me a moment.
Ladies and gentlemen, the management line is reconnected. Please go ahead, Mr. Kabra.
Yes, we can start the question again.
Yes, I was done with my queries. Any closing comments that you're going to make?
Okay. No, just thank you, everybody, for joining the call and hope everybody is safe and healthy. The pandemic definitely is not coming back soon, hopefully in India at least. And we look forward to your good prosperous year for -- globally, if I can say, and Control Print for sure.
Thank you, everyone.
Thank you, Karan. Thank you Chorus Call for arranging the call.
Thank you. On behalf of Asian Markets Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.