Labelkraft Technologies Ltd Management Discussions

The Managements views on the Companys performance, business environment, operational developments and future outlook are presented below. This discussion should be read together with the financial statements and notes forming part of the Annual Report.

The Company was incorporated in 2022. Prior to its incorporation, the Promoter, Mr. Ranjeet Solanki, had been carrying on the business as a proprietorship concern under the name Solanki Enterprises since 1997. In 2009, the business expanded into barcode labels, printing solutions and allied products with a clear focus on delivering reliable, high-quality and cost-effective identification solutions. On 11 November 2022, the ongoing proprietorship business, together with all its assets and liabilities, was taken over by the Company as a going concern. Since then, the Promoter, in his capacity as Director, has continued to lead the Companys strategic direction, operational management and business development initiatives.

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.

The Company operates as an integrated provider of barcode identification, labelling, printing and automatic identification solutions catering to a diverse range of industries across India. Its business encompasses the manufacturing of barcode labels, thermal transfer ribbons and self-adhesive labels, along with the supply of barcode printers, scanners, RFID products, ID card printing systems, patient identification wristbands and allied consumables. By offering an end-to-end portfolio of products and after-sales technical support, the Company has positioned itself as a comprehensive solution provider capable of addressing the complete identification and traceability requirements of its customers.

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 14/11, GNT Tyre Compound, Jayachamarajendra Road, Bangalore 560 002 and the construction of Companys new premises is completed and it is inaugurated on 17th July 2024.

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: 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.

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.

The Indian labels and barcode solutions industry continues to demonstrate strong growth momentum, supported by the rapid expansion of organized retail, e-commerce, logistics, pharmaceuticals, healthcare, food & beverage, FMCG and manufacturing sectors. Increasing emphasis on product traceability, inventory management, regulatory compliance and supply chain automation has significantly enhanced the demand for barcode labels, RFID solutions, thermal transfer ribbons and allied identification products across industries. The Indian packaging and labelling industry is expected to maintain a healthy growth trajectory over the coming years, driven by sustained domestic consumption, rising industrial activity and increasing investments in manufacturing under various Government initiatives.

The growing adoption of digital transformation, warehouse automation and smart logistics by businesses is expected to create substantial opportunities for companies engaged in barcode identification and printing solutions. Industries are increasingly investing in advanced barcode printers, RFID-enabled systems, handheld scanners, mobile computing devices and automated labelling solutions to improve operational efficiency, reduce manual errors and enhance product traceability throughout the supply chain. These developments are expected to provide long-term growth opportunities for the Company.

The continued growth of Indias e-commerce ecosystem, quick commerce platforms, third-party logistics providers and organized retail chains is expected to generate sustained demand for high- quality labels, shipping labels, packaging solutions and barcode consumables. Furthermore, increasing demand from sectors such as healthcare, pharmaceuticals, automotive, electronics, garments and industrial manufacturing is likely to support consistent growth in the Companys core business segments.

In addition, the industry is witnessing an increasing shift towards sustainable packaging solutions, environmentally responsible materials and recyclable labelling products. Customers are increasingly seeking innovative, durable and cost-effective identification solutions that comply with evolving regulatory requirements while supporting their sustainability objectives. Investments in advanced printing technologies, automation and process optimization are expected to further improve productivity, product quality and operational efficiencies across the industry.

The Company remains optimistic about its future growth prospects. With its integrated product portfolio, experienced management team, modern manufacturing infrastructure, strong customer relationships and comprehensive after-sales service capabilities, the Company is well positioned to capitalize on emerging opportunities in the barcode, labelling and identification solutions market. The management will continue to focus on expanding its customer base, strengthening operational efficiencies, introducing value-added products and delivering sustainable long-term value to all stakeholders while maintaining high standards of quality and customer satisfaction.

The Company operates in the barcode, labelling, printing and automatic identification solutions industry, which is influenced by various macroeconomic, operational and industry-specific factors. The management continuously monitors these risks and adopts appropriate mitigation measures to minimize their potential impact on the Companys business and financial performance.

The business is exposed to fluctuations in the prices and availability of key raw materials such as paper, films, adhesives, inks and other printing consumables. Any significant increase in input costs, supply shortages or disruptions in the procurement of raw materials may affect production schedules and operating margins. To mitigate this risk, the Company maintains strong relationships with multiple suppliers, follows prudent inventory management practices and continually evaluates alternate sourcing options.

The Company is also exposed to risks arising from global supply chain disruptions, geopolitical developments, changes in international trade policies, logistics bottlenecks and freight cost volatility. Such external factors may impact the timely availability of imported machinery, spare parts, barcode printers, scanners and other products traded by the Company. The management regularly reviews procurement strategies and maintains adequate inventory levels to ensure uninterrupted business operations.

The barcode and labelling industry is highly competitive, with the presence of both organized and unorganized players. Competitive pricing, technological advancements, changing customer preferences and increasing expectations regarding product quality and delivery timelines may exert pressure on margins. The Company addresses these challenges by focusing on product quality, customized solutions, competitive pricing, prompt customer service and continuous improvement in manufacturing processes.

Rapid technological advancements in barcode, RFID and automatic identification technologies require continuous investment in infrastructure, product development and technical capabilities. The Company remains committed to upgrading its manufacturing facilities, adopting advanced technologies and strengthening the technical expertise of its workforce to meet evolving customer requirements.

The Company also remains exposed to regulatory changes relating to product labelling, packaging standards, environmental compliance, taxation and other statutory requirements. Continuous monitoring of the regulatory environment and strict adherence to applicable laws and regulations enable the Company to effectively manage compliance-related risks.

Despite these challenges, the management believes that the Companys diversified customer base, experienced leadership, robust internal control framework, established supplier network and customer-centric approach provide resilience against potential business risks. The Company continues to review its risk management framework on a periodic basis and remains committed to implementing appropriate measures to safeguard stakeholders interests and ensure sustainable long-term growth.

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.

The Company has established a robust internal control framework that is commensurate with the nature, size and complexity of its business operations. The internal control systems are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, safeguarding of assets, reliability of financial reporting and compliance with applicable laws, regulations and internal policies.

The Companys internal control mechanisms ensure that all business transactions are properly authorized, accurately recorded and reported in a timely manner. Well-defined policies, standard operating procedures and delegation of authority are in place to facilitate efficient business operations while minimizing operational and financial risks. Adequate checks and balances are embedded across key business processes, including procurement, production, inventory management, sales, finance and statutory compliance.

During FY 2025-26, the Company reported total revenue of ^25.41 crore, reflecting healthy business operations across its product portfolio. Profit after tax stood at ?1.31 crore, demonstrating the Companys ability to maintain profitability despite competitive pricing pressures and fluctuations in input costs. Continuous emphasis on operational efficiency, customer retention, product quality and timely execution of orders contributed positively to the overall financial performance during the year.

The Company firmly believes that its employees are its most valuable asset and the primary drivers of its sustained growth and long-term success. It remains committed to fostering a work culture that promotes integrity, collaboration, innovation, continuous learning and employee well-being. The Companys human resource philosophy focuses on attracting, developing and retaining competent talent by providing equal opportunities for professional growth, performance-based recognition and a safe, healthy and inclusive workplace.

During the year, the Company continued to emphasize employee skill enhancement through on-the- job training, knowledge sharing and continuous capability development to meet evolving business and technological requirements. Performance management systems are designed to encourage accountability, recognize individual contributions and align employee objectives with the Companys strategic goals.

The Company also places significant importance on maintaining cordial industrial relations by fostering open communication, mutual trust and a collaborative work environment across all levels of the organization. Industrial relations remained harmonious throughout the year, and there were no significant industrial disputes or disruptions affecting business operations.

The management believes that a motivated, skilled and engaged workforce is essential for delivering operational excellence, enhancing customer satisfaction and sustaining the Companys competitive advantage. The Company will continue to invest in its human capital by strengthening employee engagement, promoting leadership development and creating a performance-driven organizational culture that supports its long-term growth objectives.

The statements contained in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, strategies, future plans and outlook may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions, expectations and estimates of future events, which the Company believes to be reasonable at the time of preparation of this Report.

Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors, including but not limited to changes in economic conditions, industry trends, market demand, customer preferences, competitive pressures, fluctuations in raw material prices, supply chain disruptions, foreign exchange movements, inflationary trends, changes in Government policies and regulations, taxation laws, technological advancements, geopolitical developments, availability of finance, and other risks and uncertainties beyond the Companys control.

The Company undertakes no obligation to publicly revise, update or modify any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable laws, regulations or listing requirements. Readers are therefore advised to exercise due caution and not place undue reliance on these forward-looking statements while making investment or business decisions.