Margins will be under pressure this quarter: CCL Products

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Margins will be under pressure this quarter: CCL Products

Price of green coffee has been creeping upwards in the international market. However, C Rajendra Prasad, chairman and managing director of CCL Products tells CNBC-TV18 that it is not likely to reflect on margins this quarter.

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Price of green coffee has been creeping upwards in the international market. However, C Rajendra Prasad, chairman and managing director of CCL Products tells CNBC-TV18 that it is not likely to reflect on margins this quarter. "In fact, the margins are likely to be under pressure this year," he says.

Below is the edited transcript of his comments. Also watch the accompanying video

Q: We understand that green coffee prices are gaining quite significantly in the export market. Can you give us a sense of what this would do to CCL Products?

A: For this immediate year, it is going to affect CCL a little bit, but in the long term, we should be okay. Green coffee movement will not immediately reflect on the instant coffee sale or price variation. So we will have little pressure on the margins this particular year.

Q: Give us a sense of what type of volumes you are clocking-in in FY12 or the first half of FY12 as compared to FY11?

A: In FY11, we did 12,500 of instant coffee, whereas in FY12, we will be doing close to 13,000 to 13,500. The top-line will be Rs 400 crore plus. Unfortunately, because of green coffee prices, the input cost has gone up very high. So for this particular quarter till December, we will be under pressure.

Q: Could you tell us what the prices of instant coffee are currently and what is the average that you are expecting in terms of margin compression?

A: Average will be in the same levels. We will not see any improvement or decrease because most of it is on contract-basis. When we are increasing the sales and going into new markets, there is competition. So we have to be little more prudent getting into other markets.