Labelkraft Technologies Ltd Management Discussions

The Managements views on the Companys Performance and outlook are discussed below:

Overall & Business Review:

Our company has been incorporated during the year 2022, prior to the incorporation of the company our promoter Ranjeet Solanki was carrying on the business as a proprietorship concern under the name of "Solanki Enterprises" since the year 1997. Later, our promoter with the mission to offer reasonably priced barcode labels, printing and solutions assuring customer satisfaction, started the business of barcode label in the year 2009. Later, on November 11, 2022, the running business of the above proprietorship concern was taken-over by the company, along with the assets and liabilities of the proprietorship concern. Our Promoter was appointed as Director in the company and since than he has been looking after the overall operations and major business decisions of the company. With our absolute commitment to quality, meticulous attention and level of services, today we have established ourselves as a solution provider to our customers for their needs related to printing of barcode labels, product labels, barcode ribbons, barcode printers, scanners, RFID products, ID card printing products, Patient wrist bands, and self-adhesive tape products which are used in different industries for their multipurpose use including logistic, industrial packaging etc.

Our company is engaged in the business of providing barcode code solutions, catering to many different segments of industries including FMCG, logistics service providers, chemicals, garments etc. We supply barcode printers, software, scanners, mobile computers etc. and are also engaged in the business of manufacturing the regular consumables required for the barcode printers namely the barcode ribbons, self-adhesive barcode and product labels in roll and sheet forms with help of our machines.

Our company has the required infrastructure and set up for manufacturing of both plain labels and preprinted barcode labels with the in-house capabilities. We have installed flat-bed machines, flat-bed printing machines, flexo printing machines with 5 color printing capacity, rotary machines and slitting machines which enable us to meet the requirements of our customer in time. We also have a slitting machine to manufacture thermal transfer ribbons required to print the data on to the labels by the barcode printers.

Apart from the above, we have also installed a self-adhesive tape slicing machine to slit mirror mounting tapes, tissue tapes, masking tapes etc. which are supplied to various industries across the country for their packaging needs. We are also engaged in supply of ID card printers, consumables, patient identification wrist bands, automatic label applicator machines, satin, taffeta rolls for garment companies and self-adhesive tape products. We offer quality products and services at cost effective prices. With our attitude towards quality and service to our customers, we have obtained a long list of reputed clienteles including companies like Wipro GE Healthcare Private Limited, Titan Company Limited, ITC Ltd and Indian Oil Corporation. Further, the company has qualified and experienced service engineers to install, train and repair the barcode machines, this makes the customer to stick to Labelkraft as all their barcoding needs are fulfilled under one roof.

Apart from the above, we have experience in the business of trading of duty credit scrips required to pay customs duty by the importers. These scrips are transferable as per Foreign Trade Policy of Government of India. These are procured from exporters of various products and sold to importers for their customs duty payments.

Over the years, we have established cordial relationships with our customers by providing the desired goods and services. Our customer base includes companies in the garment, automobile, retail, jewellery, FMCG, hospitals, electrical, electronic items, warehousing and logistics industry. Further, in order to reduce the cost and capitalize on the future demand, we have purchased a piece of land for setting up our manufacturing facility at No. 14/11, Sudhama Nagar, Jayachamarajendra road cross, Bengaluru - 560 002, Karnataka.

Industry Structure & Development:

Bar codes are machine-readable symbols used to encode information about a product. They comprise a pattern of lines with varying widths (1D bar codes) or rectangles, dots, hexagons, and other geometric patterns in two dimensions (2D bar codes). The retail sector is continuously growing and evolving. ‘Beep of a barcode scan is heard over 6 billion times a day all across the world. Whether it is a neighbourhood Kirana store, a supermarket or an e-commerce site, the customer wants a seamless shopping experience.

We operate in a competitive and fragmented label die cutting & printing industry with major focus towards barcoding and dealing in all barcode and RFID devices. There are no entry barriers in our industry which puts us to the threat of competition from new entrants. There are numerous players operating in the industry. We face competition in our business from a large number of unorganized and a few organized players. We may have to confront pressures in respect of pricing; product quality etc. from the clients and such pressures may put strain on our profit margins which may consequently affect the financial position of our Company. Our inability to compete with this intense competition; local, national and international will have material adverse impact on our Companys financial position.

Opportunities & Threats:

Opportunities: The growing use of RFID and barcode labels & printers in the supply chain industry fuels growth. The efficient management of the supply chain deliverable goods is the key to successful business management which in turn exerting a positive influence on the barcode labels & printers market. Reduction in the cost of poorly printed labels with the option of using barcode verifiers is another aspect of opening doors to growth prospects for key players.

Threats: Low heating led to fading bar lines, coupled with low compatibility of barcode printers with different operating systems is likely to pose a threat to the market during projection period.

Product wise performance:

The performance of barcode labels & printers depends on a variety of factors, including the quality of the components used, the design and installation of the system. The Company, during the year has given much importance to increase the performance of the products which suits the best for the future operational plans of the Company.

Outlook:

The Indian labels market is anticipated to boost at an 8.9% CAGR over the forecast period. According to the Food and Safety and Standards Authority of India (FSSAI), there is a high demand for packaged food and a plan to present front-of-package (FoP) labelling on packaged foods in India. This may help consumers to choose healthier food.

Advancing demand for perishable frozen packaged products such as meat, poultry and seafood is anticipated to augment labels sales due to the shifting consumer preference for packed & convenient food consumption. India is a fast-emerging economy with surging demand for organized retail outlets, supermarkets and convenience stores that may bolster growth in the labels market. The emergence of numerous quick service restaurants and food delivery services can foster growth in India.

Risk and concern:

The Barcode label sector is dependent on supply chain, which can be affected by geopolitical tensions, trade disputes, and other factors. Supply chain disruptions can lead to higher costs and delays in timely execution of orders. The company has no control over external factors which may adversely affect the companys operation. However, risk factors are continuously monitored by the management and necessary steps are taken to mitigate them.

Internal Control System and their adequacy:

The Company has strong internal control procedures in place that are commensurate with its size and operations. This ensures that all transactions are authorized, recorded and reported correctly. Regular internal audit and checks are carried out to ensure the robustness of the system.

Financial Performance:

During the year under review, the Company has recorded a total revenue of Rs. 1,878.90 Lakhs including the other income. Company has generated a Profit of Rs. 112.31 Lakhs for the year ended 31^st March, 2024.

Material Development in Human Resources / Industrial Relations:

Company recognizes the importance of motivated and empowered employees and has a clear employee value proposition focused on employee development, a satisfying work environment, performance appraisal, and appropriate empowerment. Further the Company believes motivated and empowered employees are the cornerstone of competitive advantage.

Key financial Ratios:

Cautionary Statement:

Statement in this report on Management Discussion & Analysis describing the Companys projections and estimates may be forward looking and are based on certain assumptions and expectations of future events. Actual results may differ from projections due to demand-supply condition, prices of finished goods and raw material, changes in Government regulations, tax structure and other factors. The Company assumes no responsibility in respect of forward-looking statements which may undergo change on the basis of subsequent development events.