Eye margin improvement, Rs 1K-cr rev in FY16: CCL Products

C Rajendra Prasad, Chairman and Managing Director of CCL Products is very upbeat on the business outlook for the company going forward. He expects the company to deliver Rs 1000 crore revenues in FY16 and too better margins.
Talking to CNBC-TV18, he sayd improvement in margins takes place with addition of value added products, which the comapny has been doing for some time now.

The company reported its Q2FY16 numbers yesterday. The standalone year-on-year revenues were down 8.7 percent at Rs 178 crore versus Rs 195 crore reported for the same period last year. The Y-o-Y EBITDA margins came in at 19.8 percent versus 19 percent and the net profit was flat around Rs 21.2 crore versus Rs 21.4 crore.

CCL Products produces the finest coffee in the world. They also import green coffee from any part of the world and export processed coffee across the globe.Below is the verbatim transcript of C Rajendra Prasad's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: It has been a slightly disappointing quarter with a 5 percent fall in revenues. Do you think that you could see some pressure in the second half of the year as well?A: If you see year-on-year (Y-o-Y), six months last year we did Rs 422 crore. This year we did Rs 454 crore.Latha: For the quarter alone?A: We have always maintained one thing -- CCL always contracts on yearly basis and it all depends on the shipments. So there is always a possibility, it could have just done after September 30. So we will absolutely achieve our numbers from last year to this year. We will cross Rs 1,000 crore and it is evident from what we have done. Everything has gone up.Sonia: I am reading exactly from your profit and loss (P&L). Your P&L shows that your revenues for this quarter have fallen by 5 percent to Rs 235 crore.A: CCL has never looked at quarter-on-quarter (Q-o-Q), it is always Y-o-Y.Latha: I heard you say the word Rs 1,000 crore, in 2014 your revenues were Rs 611 crore and FY15 your revenues were Rs 672 crore, it was a marginal increase maybe about 10-12 percent, what you are now saying is -- an over 50 percent increase in the current year -- that is a tall number, you sure you can deliver Rs 1,000 crore?A: Whatever we have said, we have delivered.Latha: Margins have improved well about 360 bps higher.A: We have gone in from bulk sale for more packed goods especially in Europe and also there is a marginal increment always on the packing. So the EBITDA also from 20 percent has gone to 21 percent. CCL always does business in advance. So whether the coffee prices go up or down, it doesn’t affect us.Sonia: Can you tell us at least how much the coffee prices have fallen by in the last two-three months and what is the expectation?A: It doesn’t matter. We don’t do that. We only have value added exporter either in Vietnam or in India. So it is a value addition, which matters to us because we do several different products for several countries, we do packed goods, we do right from ice cream manufacturers, we sell instance coffee to everybody.Sonia: You said Rs 1,000 crore will be your revenues in FY16, what about the margins?A: Generally, when we do value added products, we improve. So Y-o-Y if you see last five years numbers, practically every year it has gone up because of better products, better reinventory, better purchase because there are kind of purchases we do. So that is always an advantage.Latha: For the year as a whole, what is the revenue growth that you are maintaining that you are guiding?A: We are guiding the same that we have told earlier, we will be doing at least 20 percent than last year.Sonia: Will you be at any point increasing your capacity further?A: Already we have done. Last year itself we told that this year we will be adding capacity in India from 15,000 to 20,000 that is already on board and before December itself, 20,000 capacity will be there.Sonia: How much have you spent as far as the capex is concerned and what would the capex be for the next year?A: Most of the spend has come from internal accruals only. We must have spent around close to Rs 30 crore but everything has come from internal accruals.