Expansion plan under way; to decide by Q2FY17: CCL Products

CCL Products is looking to expand the business, but will take a decision only by the second quarter of FY17, says the company’s CMD C Rajendra Prasad. “The government of Andhra Pradesh is insisting that we should do something here in India,” Prasad says adding that it all depends on Vietnam and what concessions they are giving.Below is the transcript of C Rajendra Prasad’s interview with CNBC-TV18's Mangalam Maloo and Ekta Batra.Ekta: How exactly coffee prices are trending at this point in time considering that your stock itself has gained around 18 percent odd in the past month. So, would that have any correlation with what coffee prices are doing internationally?A: No, actually in CCL the coffee prices frankly do not matter because most of our contracts are coffee raw material plus-plus. So, we do long term planning and we do several products. So, we are into now more than 70 countries in the world. So, our final prices do not correlate anything to do with coffee; Green coffee price because it is all plus-plus. They don't affect on a direct basis.Mangalam: But in that case could you then tell us what your outlook on capacity expansion is? I believe you are in a dilemma whether to go in for a freeze dry or a spray dry process in India or Vietnam. Any clarity on that that you can provide to us?A: That we will take a decision. We will definitely expand but the expansion will take place - final decision we will make in the second quarter. In June - July we should be able to be more clearer. We will definitely do an expansion. Whether to do a 5,000 tonne freeze drying where the demand would be as of today and there is a big demand for us from our own client and new clients for a freeze drying plant and we already have existing capacities, infrastructure in Vietnam. So, it all depends. We can't tell immediately but next couple of months everything will be clear.Mangalam: Depends on what, anything that is stopping you from taking the decision sooner than the second quarter?A: The two most important things are that we have a new capital in Andhra Pradesh now. The government of Andhra Pradesh is insisting that we should do something here in India. It all depends on Vietnam and what concessions they are giving. So, it gives on a long term basis which is the best location, whatever is the best location for us we will be going for that.Also the demands what we are looking at is very high value added products. Because there are some few of our big clients who have already been with us for more than 20 years where we are seeing that the new clients have added their products to us. So, this is where we decide which one, whether to do it in Vietnam or in India.