| Control Print Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on long term bank loan facilities of Control Print Limited (CPL; part of the Control Print group) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL A-‘. Rating on short term bank loan facilities has been reaffirmed at CRISIL A2+.
Revision in outlook reflects the expected continued improvement in the business risk profiles along with sustenance of the financial risk of CPL over the medium term. A wide product portfolio catering to various industries and diversified clientele have helped the company scale up operations. Company had registered growth of ~26% in fiscal 2022 to Rs. 256 crores as compared to fiscal 2021. Operating profitability was healthy at 23.2% in fiscal 2022. The strong operating performance in fiscal 2022 was supported due to good traction in consumables as the industrial production increased in fiscal 2022. Consequently, company’s cash accruals improved and were at Rs 41 crore post dividend pay-out in fiscal 2022. Company has already registered revenue of ~Rs. 138 crores in H1FY23, with operating margins of more than 23%. The outlook revision also factors in the sustenance of the company’s financial risk profile and its healthy liquidity. Capital structure remained comfortable, as indicated by low total outside liabilities to adjusted networth (TOLANW) ratio of 0.27 as on March 31, 2022.
The ratings continue to reflect the extensive experience of the promoter in the industrial printer industry, CPL’s established market position, healthy profitability and strong financial risk profile. These strengths are partially offset by large working capital requirement and modest scale of operations. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of CPL and its wholly owned subsidiary, Liberty Chemicals Pvt Ltd (LCPL), Innovative Codes (I) Private Limited (ICPL) and Control Print B.V.This is because LCPL and Control Print B.V is a wholly owned subsidiary of CPL , ICPL is subsidiary company and there are financial and technology linkages between these companies.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Established market position and extensive experience of the promoter: The group’s brand, Control Print, has a strong recall in the domestic industrial printer market as the promoter has over 31 years’ experience in the segment. It also has established relationships with reputed clientele such as Hindustan Unilever Ltd, Britannia Industries Ltd, Tata Steel Ltd, ITC, United Brewries, Aristo Pharma etc. Compony is one of the largest players in India in Coding and Marking industry with market share of more than 18%.
Control Print Ltd. has an installed base of over 15,500 printers. These printers are expected to be utilised over period of ~8 years. The company generates income from the consumables, spare parts and maintenance of installed printer base.
Sound operating efficiencies: Company has healthy operating efficiencies marked by healthy RoCE of ~18-20% in the past three fiscals through fiscal 2022. The company has been able to register operating margins in the range of 22-26% over the past five fiscals through fiscal 2022, with continuous improvement in technologies and improved scale of operations. Company is expected to maintain healthy RoCE over medium term, backed by healthy profitability.
Strong financial risk profile: Networth and total outside liabilities to adjusted networth ratio are healthy at Rs 242 crore and 0.6 time, respectively, as on March 31, 2022. Debt protection metrices were robust on account of strong operating profitability and low utilization of debt. Financial risk profile is expected to remain strong with healthy accretion of reserves, with no debt funded capex expected over medium term.
Weaknesses Moderate scale of operations: CPL has moderate scale of operations as indicated by turnover of Rs 195-256 crore in the past three fiscals through fiscal 2022 The Indian industrial printer market is dominated by Videojet India Pvt Ltd, Domino Printech India Pvt Ltd, Markem-Imaje India Pvt Ltd and CPL. Multinational companies (MNCs) have carved a market for themselves being in the industry for a longer period and have established their position in the organised market Furthermore, being global players, MNCs have larger installed base to garner higher revenues. However, CPL is continuously improving its product mix and is expected to improve its market share with higher installed printer base over medium term. However, CRISIL Ratings believes that the moderate scale of operations and intense competition from MNCs will continue to constrain the business risk profile of CPL over the medium term.
Working capital intensive operations: CPL’s operations are working capital intensive as indicated by high gross current assets of 221 days as of March 2022. This is primarily on account of high inventory level of around 123 days, maintained to ensure timely supply of consumable and spare parts to clientele. Operations are expected to remain working capital intensive over the medium term, and may continue to be funded by internal accrual, minimising bank limit utilisation. |
Liquidity: Strong The group has healthy liquidity as it is expected to generate strong cash accruals of Rs 40-60 crore over the medium term against NIL debt repayment obligations over medium term. Company is having no major capex plans over medium term. Operations are working capital intensive, funded largely by internal accrual, resulting in low bank limit, mostly remaining debt free, over the 12 months through September 2022. Liquid assets were at around Rs 50 crore as of March 2022, providing additional liquidity cushion. |
Outlook: Positive CRISIL Ratings believes CPL's business and financial risk profile will benefit from its established market position, already established printer base and new product launches. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Group Set up 1991 in Mumbai by Mr Basant Kabra, CPL manufactures industrial printers and consumables such as ink and spares, and also provides maintenance services. The company is listed on the Bombay Stock Exchange and National Stock Exchange. While sale of printers contributes 15-20% of total revenue, income from consumables and servicing account for the remaining 75-80%.
Control Print had acquired 80% Equity Share of Innovative Codes (I) Private Limited in August 2021 and 75 percent of Netherland based Markprint BV through its wholly owned subsidiary company Control Print B.V. in July 2022 |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 20 | HDFC Bank Limited | CRISIL A-/Positive |
| Cash Credit | 27 | ICICI Bank Limited | CRISIL A-/Positive |
| Letter of Credit | 3 | ICICI Bank Limited | CRISIL A2+ |
This Annexure has been updated on 08-Mar-2023 in line with the lender-wise facility details as on 01-Mar-2023 received from the rated entity.
Criteria Details
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