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00:00Shaila Srisanth, the Managing Director of CCL Products is joining us now on the show.
00:05Mr. Srisanth, a very good morning to you and great to speak with you.
00:08Let's take a look at your numbers, a decent quarter this time round,
00:12even as the cost of raw materials have increased.
00:15Is that the way you've been looking at it?
00:17Pretty good performance despite one key raw material bump up.
00:23Yeah, so since we work on a cost-plus model,
00:26it actually doesn't really have too much of an impact for us.
00:30So we've been performing as per the guidance that we have already given.
00:37Mr. Srisanth, let's talk about how your top line is doing
00:41and you've nailed impressive growth over the last many years.
00:47Going ahead for the rest of FY25, I know the coffee industry is a mature product, right?
00:53So you're not expecting to grow more than 4% to 5%.
00:55You clearly are an outlier.
00:57What sort of volume growth are you guiding for for FY25?
01:02So one of the reasons why we took an aggressive step and we've doubled the capacities
01:08is because we are quite confident of 15% to 20% volume growth year on year,
01:14at least for the next two to three years.
01:17So keeping that objective in mind, only we've got it for that expansion.
01:21And the reason why we are an outlier is also because today we are actually at the base of the pyramid.
01:28We are doing generic products.
01:31We're doing a lot of bulk manufacturing.
01:34We've slowly started transitioning to B2C segment.
01:38We've also started working on more of small packs.
01:41So we're going up the value chain,
01:43which is also why we are confident that what we're doing is much more sustainable in the long run.
01:50Shishant, just one quick question.
01:54Continuing on the top line, 90% of your business still comes from B2B.
01:59The last time we spoke, you talked about how you aggressively want to build out your B2C segment as well.
02:04You know, tell me, where does that split between B2B and B2C sit at?
02:09And where will that expansion come from?
02:11Would it be B2C, B2B?
02:13Break that down for us.
02:15So it's actually coming from both areas.
02:18It's just that the B2C segment is growing disproportionately higher.
02:23So we are seeing almost 35 to 40% growth from the B2C segment.
02:29And for the B2B segment also, we are seeing at least around about 15% growth.
02:35So we feel that both are quite sustainable.
02:39The B2C, because the segment is still a bit small, we're able to have higher growth rates over that.
02:47Okay.
02:48Shishant, good morning. Neeraj here.
02:50You continue to maintain that growth rates for sure.
02:53Just wondering if, as you alluded to, maybe partly or maybe I got it wrong,
02:58that the composition of what forms a part of that 15%, 20% growth for the next three years,
03:06would that be different in terms of high-value coffee versus low-value coffee?
03:12And traditionally, you've been a company which doesn't get impacted at all
03:17because you pass on the margin benefits or margin losses.
03:20But could margins show an uptick because of a higher-value premiumization bend
03:25that you might have over the next three, four years?
03:28So our endeavor is to focus on improved margins in the longer run.
03:34But at this point in time, for the next year or two, we've given the guidance,
03:38saying that we're just going to maintain the guidance.
03:41One has to keep in mind that we've come up with new capacity.
03:44You have depreciation.
03:46You have interest costs at an all-time high.
03:49You have multiple issues which are currently there.
03:52And we're trying to grow volumes in a space where a market category is growing,
03:57let's say, single-digit, the low single digits.
04:00So keeping all these challenges, we are creating a product mix
04:04that combines premium products as well as value-volume products.
04:11So with the combination of the two, we are saying that we will maintain
04:15the existing guidance at least for the year or two,
04:18and that foundation will help us to create better margins in the future.
04:25Sushant, between Neeraj and me, we are both fighting
04:27who's going to ask you the next question.
04:29So I'm going to take this one very quickly on your expansion plans.
04:32And also, you, I know, historically seem to identify a customer
04:37and then make that investment in expansion.
04:41What are your expansion plans for the rest of the year,
04:44for the next couple of years?
04:45Where do you see CCL?
04:47And also, debt equity healthy?
04:49Because I know you had taken on heavy debt to fund those expansion plans.
04:53Yeah.
04:54So for the expansion, we've taken about a total of 650 crores or so.
04:59And India was actually debt-free earlier.
05:02Now the new plan that has come online as a subsidy company
05:07that is operational this year.
05:10And for Vietnam, we have a freeze-dried expansion
05:14that is coming online as well in the next two months' time.
05:18So with these two expansions, we are now reaching
05:23around 77,000 tons of production capacity.
05:26So we don't have any major expansion plans in the near future.
05:31We're just focusing on more of capacity utilization
05:34over the next couple of years.
05:37Okay.
05:38Well, Srisanth, it was an absolute delight understanding this.
05:41Congratulations on a very good performance
05:44and all the best for the quarters ahead.