Promoters have increased their ownership stake by 5 percent in the September quarter. For FY14E, the ma nagement expects to produce 6,500 million tonne at the Vietnam plant – despite poor Q1 performance. Vietnam plant has a capacity of 10,000 million tonne.
Also Read: Buy CCL Products India, recommends Way2Wealth
The company's consolidated Q2FY14 net sales were up 30.4% at Rs 166.1 crore as against Rs 127.4 crore and the profit after tax was up 21.9% at Rs 16.7 crore as against Rs 13.7 crore the previous year.
C Rajendra Prasad, CMD, CCL Products, discusses the company's plans to 80% capacity utilization in Vietnamese plant next year, targetting Rs 700-750 crore revenues and close to 10% net margins on CNBC-TV18.
Below is the edited transcript of the interview
Q: You have got a regulatory approval to increase your capacity utilisation in Vietnam. Could you tell us what the capacity stands at and where will the capacity utilisation now increase to and what would be the revenue potential from your Vietnamese plant?
A: In Vietnam, we started in April and that was officially inaugurated by our Minister for State of Industry and Commerce. Right now we have a 10,000 million tonne capacity. This year we will do at least minimum 40 percent of our capacity utilisation. Next year will be our best performance, maybe close to 80 percent, we will reach in second year onwards. We have started the liquid coffee also. It is already getting completed by first two quarters of the next year. The liquid coffee will be in full production in Vietnam. We have done a USD 50 million investment in Vietnam.
Q: How will this extra capacity translate into your revenue stream? In the first half you did about Rs 300 crore of revenues what do you expect to see in the second half and what do you expect to see in FY15?
A: In the second half, we should touch anywhere, consolidated for the year 2013-2014, will be around anything from Rs 700-750 crore. Last year it was Rs 650 crore. Also, we have launched a product in India. A branded product called Continental Spéciale which is giving us better bottomline.
Every super market in Andhra Pradesh has placed our coffee brand. Also, we have done some private label in India. Companies like Reliance, Spencers, we are manufacturing on their brand our own coffee on a private label. Same model what we have been successful worldwide. We are utilising this in India also.
Q: You have indicated a Rs 700-750 crore revenue growth in FY14. You said your margins could improve, could you tell us roughly where the margins would stand at and perhaps even in earnings per share (EPS) estimates for FY14?
A: We are expecting as of now about 8-9 percent bottomline. It should increase to about 10-11 percent by next year onwards.
Q: Net margins?
A: Exactly net margins after depreciation and interest.
Q: Any product price increases that you guys plan to take in the next six months?
A: Because we are coming into domestic market that itself gives a huge advantage being a branded product. We are the only freeze dried manufacturers in the country. Right now we have put our own brand. The other freeze dried which are in the market are all imported ones and are very expensive. By the time they are imported they become stale. Our product is much superior. So, we have seen a much better margin coming from freeze dried products in India.
CCL Products stock price
On December 30, 2013, CCL Products India closed at Rs 42.00, up Rs 1.70, or 4.22 percent. The 52-week high of the share was Rs 42.30 and the 52-week low was Rs 21.57.
The company's trailing 12-month (TTM) EPS was at Rs 5.09 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 8.25. The latest book value of the company is Rs 22.54 per share. At current value, the price-to-book value of the company is 1.86.
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