CCL Products had been on the buying radar of many brokerages mainly on the back of its newly-commissioned Vietnam plant, which is likely to drive its growth. Recently, Nirmal Bang came out with a buy view on the stock with a target price of Rs 140 per share.
Discussing the company’s prospects and its plans ahead, C Rajendra Prasad, CMD, CCL Products, said this is their second year of operation in Vietnam and they will be crossing 50 percent of the capacity.
“All profits coming from Vietnam for next four years will be tax free which will give us a big boost. Next year we target to do about 60-65 percent and in the year after that, we should be achieving 100 percent capacity,” Prasad said.
He said once the company is able to cross the 70-75 percent capacity, and since the infrastructure is already in place, it can double up its factory production by 2017-18.
Below is the transcript of C Rajendra Prasad’s interview with Reema Tendulkar and Ekta Batra of CNBC-TV18. Reema: One of the key reasons for optimism in the company is on account of Vietnam plant because that provides you the advantage of raw material, proximity to raw material, some tax advantages. Currently how much does Vietnam contribute as a percentage of revenue and do you have plans to scale up your Vietnamese plant and if yes by how much?A: This is the second year of operation in Vietnam and we will be crossing 50 percent of our capacity. So, that is as you rightly put it this will give us the maximum benefit because the first four years of our operation which will start from this year we have zero percent tax there. There is no income tax. So, all the profits coming from Vietnam for next four years will be tax free. That will give us big boost for the company and next year we target to do at least about 60-65 percent and next three years time we should be achieving 100 percent capacity. Once we cross 70-75 percent capacity, as the infrastructure building has already been done we can scale up the factory production from 10000 to 20000. By 2017-2018 we expect that we will be in that situation. Ekta: Can you just give us a sense in terms of at least on your margins how do you expect the trajectory to pan out in the remaining part of the fiscal because you did around 20.5 percent with this Vietnam plant possibly being commissioned soon. Where is the trajectory possibly headed, where do you think a new range for the margins would come in?A: Margins should come at least around 22-23 percent. Safely we can take it and we are very confident about this margins also. Reema: Considering that you are not going to be paying any tax on the profits that you make on the Vietnamese plant could you tell us what the profit figure might look like for FY15; the revenues as well as profits?A: We are expecting to do at least about Rs 90-95 crore and revenue will be around Rs 900 crore. It is consolidated revenue. Reema: Both figures are consolidated?A: Right.
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