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Last Updated : Jul 31, 2015 04:06 PM IST | Source: CNBC-TV18

Higher capacity, new products to boost profits in FY16: CCL

In an interview with CNBC-TV18, C Rajendra Prasad, Chairman & Managing Director of CCL Products said the company plans to expand production capacity and add new products this year.

Higher capacity and value added products boosted the revenue growth in June quarter, C Rajendra Prasad, Chairman & Managing Director of CCL Products told CNBC-TV18.

CCL’s revenue grew 25 percent to Rs 220 crore and net profit increased 49 percent to Rs 30.2 crore in the June quarter. Prasad said full benefits of Vietnam facility were realised in last quarter.

The company plans to expand production capacity to 25,000 tonne through internal capital, he said adding that CCL also plans to add more products this year.

Prasad said the revenue outlook for the full year is Rs 1,000 crore and profit expectation is Rs 125 to Rs 130 crore.

Below is the transcript of C Rajendra Prasad’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: I understand that the full benefit of your Vietnam facility was seen this quarter because of which you saw a revenue growth of more than 25 percent. Is this growth sustainable?

A: Yes, that is exactly what we are expecting and last year, we did 20,000 tonne. We are expecting this year we will be doing 25,000 that will be around 25 percent more than last year.

Vietnam will be our main focus and we have entered into several different markets. With 25,000 tonne we cross Rs 100 crore this year. Similarly, our bottom line should be in the range of Rs 125-130 crore.

Latha: Are there any other destinations you are now looking at or in any way scaling up? Rs 1,000 crore revenues this year is of course a fairly robust growth what thereafter?

A: What we are doing right now is once we cross this 25,000 tonne so we will be expanding our Vietnam facility from 10,000 to 20,000. Then going forward because we are looking into some newer closer to Vietnam countries where we are right now not there because Vietnam and those countries have zero duty structure in ASEAN countries.

Where from India we are being paying duties so that is why we have not been very aggressive in selling in these countries. So, going forward we should be able to do 30,000 tonne in next two years then we will be expanding, then we will look into a facility to start another plant somewhere else.

Sonia: If you are looking to increase your number of plants I am sure you have a capex plan that you have laid out as well. How much would you be looking to invest over the next couple of years and would you be looking to raise any money from the market?


A: No, we have been always a conservative company. This year also we have expanded our Indian capacity from 15,000 to 20,000. Most of the capex has come from internal accruals. For Vietnam when we go from 10,000-20,000 tonnes also will be from internal accruals because today Indian operation is fully debt free.

Switzerland operation is debt free, we have a very small loan component in Vietnam which we have still two to three years to repay. So there is no capex as such we are going to raise from the markets.

Latha: Would your margins improve even further? These are fairly robust margins at nearly 20 percent -19.50 percent you will do better?

A: Yes, we should. Once we utilise more capacity, always it has been the truth that whenever we are utilising more capacity with the same kind of expenditure the margin should improve.

Sonia: You spoke about Rs 1,000 crore by the end of this year that compares to Rs 880 crore last year. That is the growth of around 14 percent that you are looking at on your topline?

A: We are always very conservative. We are confident to do Rs 1,100 crore, but always better to say something less and perform better. That is the philosophy of the company.

Sonia: My question was that are you looking to add any new products? I understand that that you have got a revenue push also because of new value-added products in your profile, so can you tell us whether there are any margin accretive products that you would be adding?

A: Yes, that is absolutely true. That has been our focus always to go in for more value-added and better products. We have recently put in some equipment, which is giving us better products and by this year end, our Vietnam facility, which has been added with a liquid coffee plant from India, is going to be in production.

So, that will give us-once we add the liquid coffee also along with our other coffee, that should give us better value addition in the long run.

Sonia: In terms of coffee prices, what is the trend that you are seeing for the next three to six months?

A: The trend will continue because there is a supply and demand has been-last six months we saw little less coffee prices but it is catching up and this will be stable for some more time to come.

Sonia: If you are looking to increase your number of plants, I am sure you have a capex plan that you have laid out as well. How much would you be looking to invest over the next couple of years and would you be looking to raise any money from the market?

A: No, we have always been a conservative company. This year also we have expanded our Indian capacity from 15,000 to 20,000. Most of the capex has come from internal accruals.

For Vietnam, when we go from 10,000-20,000 tonnes also will be from internal accruals because today Indian operation is fully debt free. Switzerland operation is debt free, we have a very small loan component in Vietnam which we have still two to three years to repay. So, there is no capex as such that we are going to raise from the market.

Latha: Would your margins improve even further. These are fairly robust margins at nearly 20 percent -19.50 percent you will do better?

A: Yes, they should once we utilise more capacity. It has been the truth that whenever we are utilising more capacity with the same kind of expenditure the margin improve.

Sonia: You spoke about 1,000 crore by the end of this year that compares to Rs 880 crore last year so that is the growth of around 14 percent that you are looking at on your topline.

A: We are always very conservative. We are confident to do Rs 1,100 crore but always better to say something less and perform better. That is the philosophy of the company.
First Published on Jul 31, 2015 11:02 am
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