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Last Updated : Mar 04, 2016 02:05 PM IST | Source: CNBC-TV18

Expect large volume growth in FY17: CCL Products

In an interview with CNBC-TV18, C Rajendra Prasad, CMD of CCL Products said the company expects large volume growth in FY17 but refrained from sharing any estimate guidance number for volume and net profit growth.

Analysts have reduced the volume guidance for CCL Products to 21 kilo tonne from 23kilo tonne and expect a 20 percent growth in net profit for FY16.

In an interview with CNBC-TV18, C Rajendra Prasad, CMD of CCL Products said the company expects large volume growth in FY17 but refrained from sharing any estimate guidance number for volume and net profit growth.

With regards to CCL's business expansion in Andhra Pradesh, he said that the state gives more financial incentives to the company as compared to Vietnam.

He further said that Vietnam will drive the company's profitability and expects capacity utilisation to increase to 85 percent in FY17 against 65 percent in this fiscal.

Below is the verbatim transcript of C Rajendra Prasad’s interview with Nigel D’Souza and Reema Tendulkar on CNBC-TV18.

Nigel: For your nine months ended, what exactly is your volumes and for this year ended, I believe that earlier you were looking to do close to around 23,000 tonne approximately, now you have scaled that down?

A: We did not really scale as such because we are still waiting for some more numbers to come in. We are confident this is a problem with our – always we have mentioned earlier also, whenever we talk about this, we only talk about our volume sales and the bottomline, turnover. Also understand that most of the coffee is a commodity. Generally last one year we have seen that green coffee prices were under pressure but it is for CCL it is always a value addition. So, the bottomline does better than last year; whatever guidance we have given, we will maintain that.

Reema: Can you give us your FY16 guidance on revenues, profits as well as on volumes because what we have picked up is that your FY16 volumes could be now 21 tonne and earlier as my colleague was getting at, the earlier expectation was much higher at 23 tonne? So give us your guidance on revenues, profits and volumes for the full year.

A: We are doing more expensive product so what happens is wherever we do more value addition, both bottomline increases. So, what happens is volumes might come down but the turnover and the bottomline improves.

Reema: If you could just help us with the numbers, what should we expect by way of volumes as well as revenue in profit growth?

A: For the past one year we have not given any numbers because of so many other issues.

Nigel: Could you give us what is your capacity in India as well as Vietnam and I am aware that you are looking to increase capacity in India, why India, do you have the land and why not do it in Vietnam? I believe you have land over there as well and it could be more feasible option?

A: No this is in India. What we are going to do if at all we do, the advantage what we have, we have a new state, the state of Andhra Pradesh has given us much better financial incentives then Vietnam. So, we expect that it could be in India but the decision could come only sometime in July-August.

Nigel: But what is your capacity currently in India and what is it in Vietnam? Is it around 10,000 tonnes in Vietnam?

A: Yes, it is right. 10,000 tonnes in Vietnam.

Nigel: And in India it is around 15,000-18,000 tonnes?

A: 20,000 tonnes.

Nigel: You are looking to scale that up by 5,000-10,000 tonnes?

A: 5,000-10,000 tonnes, it all depends on what we are looking at. If it is in a freeze dry plant we will put up a 5,000 tonnes plant. If it is a spray dry plant we will put up 10,000 tonnes. That is a different use. The difference between freeze dry and spray dry.

Reema: We have seen a lot of currency volatility and depreciation in the likes of rouble which could affect your export to Russia. Could you walk us through what the order picture has been and whether any orders has been cancelled or at least deferred?

A: Russia at one time total business of CCL used to be 75 percent. Today it is only less than five percent. So, it doesn\\'t affect CCL at all. We have scaled down over these last 20 years from 75 percent to five percent only we sell to Russia and a contract is a contract as far as CCL is concerned. No contract has ever been cancelled.

Nigel: Currently you are not exporting anything to the United States?

A: We are doing.

Nigel: What is the percent?

A: About 10 percent we are doing. Future USA is going to be a big market for us.

Nigel: So what ideally would you like that 10 percent revenue currently if that is coming from there. You would like it to go to 20-30 percent and from where will you export it, from India or from Vietnam?

A: Both. Normally what happens is we have consolidated in such a way the product what we have started doing is we have a choice whichever plant is ideal. It should come from the group CCL, whether it is Vietnam or India it is our decision.
First Published on Mar 4, 2016 02:05 pm