With regards to businesses abroad, C Rajendra Prasad of CCL Products expects Switzerland to do much better in FY15 and Vietnam to see capacity utilisation of around 75 percent in FY16.
C Rajendra Prasad, executive chairman, CCL Products is very optimistic of the growth outlook for the company going forward and pegs FY16 revenues at Rs 1110 crore and PAT at around Rs 115 crore.
The company has been one of the star performers of the year 2014. The stock rose nearly 300 percent in the year.
India, according to Prasad will be a big growth market for the company. He expects FY15 India revenues to be around Rs 70 crore and that of FY16 to be around Rs 125 crore. Most of the company's profits will come from Indian operations, he adds.
With regards to businesses abroad, he expects Switzerland to do much better in FY15. The company is also looking to target African markets in the coming 2-3 years, says Prasad.
According to him the instant coffee sales in India for FY15 would be 20,000 tonnes and that in FY16 would be 25,000 tonnes. Meanwhile, the sales in FY15 for Vietnam would be around 5000 tonnes.
The company as of now is debt free with the exception of working capital debt, says Prasad.
CCL Products is engaged in the manufacture of Soluble Instant Spray Dried Coffee Powder, Spray Dried Agglomerated / Granulated Coffee, Freeze Dried Coffee, as well as Freeze Concentrated Liquid Coffee.
Below is the transcript of C Rajendra Prasad’s interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.
Sumaira: Going forward now you have guided for a revenue target for FY15 of about Rs 900 crore and on the bottom line these are consolidated figures a target of about Rs 90-95 crore. Could you do better than that by the end of FY15 and could FY16 turnout to be much better?
A: 2016 will be much better it will be anything more than Rs 1,100-1,200 crore in 2015-2016. We expect to cross at least about Rs 110 crore as net profits consolidated.
Reema: For FY15 do you think you will do better than the guidance that you have given us?
A: We always do that that is what I can say. We always have done better than what we have committed.
Sumaira: How much scope or headroom sir is there for you to expand your margins in FY15 itself I mean you are currently closer to that 20 percent mark. How much higher could they go?
A: Not much, the reason is that we are already contracted most of the contract so may be about 4-5 percent. I do not think it will be more than that.
Reema: What will be the biggest driver of this kind of growth for the company? Will India start contributing significantly? How much is India currently contributing and what is the growth?
A: The bottom line of India brand will contribute the maximum. The margins in India are much better than what we have done. So, we expect that next year when we are targeting ourselves to anything from Rs 110 to Rs 115 crore net profit most of it will come from the Indian operation where our brand establishment is happening very slowly but is very solid.
Reema: Can you give us some numbers in terms of currently India’s revenues as well as India’s profits as well as the growth?
A: Last year in India we did about more than Rs 40 crore. This year we expect to do anything from Rs 70 -75 crore. Going forward from FY15-16 we expect to do at least minimum of Rs 125 crore.
Sumaira: In this quarter gone by whatever little overheads that you had because of this commissioning of the Vietnam facility now that it is come on stream how much do you think it could bump up your earnings by?
A: Next year we expect to do at least 75 percent of our capacity utilisation in Vietnam and also one more good thing happened this year is our Swiss plant which was dragging us little bit on the profits, will turnaround this year itself. So next year we expect to do much better in Switzerland so overall group will do exceedingly well.
Reema: Swiss plant I believe made a loss of about Rs 4 crore in FY14?
A: That is right, that we have totally wiped out. In fact, we might make a small profit this year itself.
Reema: What could be the expected profits in FY16?
A: In FY16 we should do at least about Rs 3-4 crore minimum profit in Switzerland itself.
Reema: Since India is turning out to be such a big growth market for you all we understand right now CCL products only supplies to other brands.
A: We have a brand in our state of Andhra Pradesh and Telangana.
Reema: So will you look to expand that?
A: Yes, we do. We are doing very nicely soft launch in North India, some pockets we have done. The acceptances have come up very well and we are now selling only continental special brand.
Sumaira: Your interest cost is also being climbing down. In this quarter itself it is almost like one-fourth lower, any further plans to bring down debt?
A: We do not have any debt. The debt what we have is only in the working capital depending. It is only a temporary capital requirement.
Reema: When we had spoken to you last time you had told us that you will do a sales guidance, you had given us some numbers of 15,000 tonne of instant coffee from India?
A: That was last year, this year we will be doing that. We will do a consolidated numbers of around 20,000 tonne in CCL group itself this year in FY15. In FY16 we are expected to do at least around 25,000 tonne.
Reema: What about from Vietnam, it stood at 5,000?
A: Vietnam right now it is 5,000 tonne. We might do may be about 5-10 percent more but next year will be around anything from 7,000-7,500 tonne.
Sumaira: Any new geography which you are planning to explore?
A: Yes, we are still working on. Once we reach our targets of private label in African market that will be the may be next two to three years we will go there.
Sumaira: In Vietnam itself any plans to increase capacity? You said you have already reached 75 percent capacity.
A: Once we reach 75 percent then we will double that capacity from 10,000 to 20,000. That will come only in 2016-2017.