Operator: Ladies and gentlemen, good day and welcome to the CCL Products India Limited Q2 FY27 earnings call hosted by Ashika Institutional Equities. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference call over to Mr. Dipak Saha from Ashika Institutional Equities. Thank you and over to you, sir.
Dipak Saha: Thanks, Ikra. Good morning, everyone. On behalf of Ashika Institutional Equities, it's indeed a great pleasure to host the Q2 FY27 earnings call of CCL Products Limited. Joining us today to discuss the earnings call for the quarter ended 30 September 2026 are Mr. Praveen Jaipuriar, Chief Executive Officer, Mr. Chaitanya Avasare, Chief Financial Officer, Ms. Sree Reddisari, Company Secretary and Compliance Officer. We thank the management for giving us the opportunity to host this call. I would now like to hand over the call to Praveen sir for his opening remarks, post which we'll open the floor for Q&A. Thank you and over to you, Praveen sir.
Praveen Jaipuriar ): Yeah. Thank you, Deepak, and thanks for Ashika Securities team and Ikra for hosting us and this call. Good morning, everyone. I welcome you all to the second conference call of FY 2026-2027. Now let me give a brief overview of the company's performance for the second quarter and the H1 ended 30 September 2026. The group has achieved a turnover of INR 1,215.99 crores for the second quarter as compared to INR 1,128.21 crores for the corresponding quarter of the previous year, achieving a value growth of 7.8% on the back of a double-digit volume growth. The value growth, because of the green coffee prices coming down, the value growth trails the volume growth, which stands at double digit.
Praveen Jaipuriar ): The EBITDA stands at INR 217.3 crores as against INR 198.6 crores, which is a growth of 9.5%, while the PBT is INR 150.86 crores, growing at 18.7%, and the net profit stands at INR 130 crores with a growth of almost 29%. As far as H1 is concerned, the group has achieved a turnover of INR 2,419.58 crores as compared to INR 2,186.25 crores, which is a growth of approximately 11.6%. The EBITDA stands at INR 414 crores as against INR 360 crores, which is a growth of almost 15%. The PBT, which is at INR 279.88 crores, is growing at 26.48%. The net profit, which is at INR 246.96 crores for the H1, is growing at 42%. The domestic business has achieved a gross turnover of INR 210 crores this quarter, out of which the brand sales is approximately INR 140 crores.
Praveen Jaipuriar ): The good part is that the growth momentum for the branded business continues, and we are growing at 25%, and we look forward to maintain this kind of a growth momentum going forward as well. As far as the green coffee prices are concerned, while it is still fluctuating, but has been range bound in the region of $3,400 to $3,800 per tonne. The Vietnam crop, which is slated to come around November, December time, is the time which will decide the future price trends for coffee. But the good thing is that even before the crop, the prices have held on to these levels, which is a good sign.
Praveen Jaipuriar ): The order position for Q3 and Q4 looks robust, and we expect to end the year exactly as per the guidance that we had given at the start of the year, which was around 15% volume growth and a similar EBITDA growth as well. That is a brief note from our side. Now I open the floor for questions.
Operator: Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shirish Pardeshi from Motilal Oswal Financial Services Limited. Please go ahead.
Shirish Pardeshi: Hi, Praveen and team. Good morning. Thank you for the opportunity. Praveen, starting with the volume growth, what you have stated, is it significantly higher than 15% or is it in the range of 10% to 15%?
Praveen Jaipuriar ): No, it is in the range of 10% to 15%.
Shirish Pardeshi: Okay.
Praveen Jaipuriar ): Yeah, it is in the range of 10% to 15%.
Shirish Pardeshi: Okay. One follow-up here. I think we have been seeing coffee prices declining and the customers were also not stocking up. I would assume that inventory level would have normalized now.
Praveen Jaipuriar ): Right.
Shirish Pardeshi: Hence, the order book growth looks very strong at this time because coffee prices might further decline or remain stable.
Praveen Jaipuriar ): Shirish, there are two views here. One is that the good thing was that every time before the crop, generally the coffee prices tend to increase because there is a lack of availability of coffee before the crop. This time, as I was telling you in the opening remark, it has been range bound. While it is fluctuating, every day we see some $50, $100 of ups and downs that happens on a daily basis. The good thing is that it has not broken away from the $3,700, $3,800 levels. Now we are expecting the crop to come by end of November, December.
Praveen Jaipuriar ): While there are news of El Niño and some pocket floods as well, there are conflicting reports that is coming from the market. The fact that the pre-harvest prices are good, there is an expectation that there could be a further reduction. During this time, what happens is that the customers also wait for the direction to evolve by November, December.
Praveen Jaipuriar ): Every year we see that November, December is the time we start getting more contracts into the order book. Generally, same is the case during June and July when the Brazil crop comes in. I think that's how the things are. As far as we are concerned, as I was telling that our Q3, Q4 order book looks robust, and we are well on track to get that 15% volume growth for the year. Let's say some additions happen, then we'll keep updating you on that front as well.
Shirish Pardeshi: Okay. No, I was just trying to check, is there any distortion between FD and spray-dried volume growth in Q4?
Praveen Jaipuriar ): Of course, two things, Shirish. FD, our utilizations are much better. The FD demands in the world market has been better than the FD demand. As far as our proportions are concerned, it is very much same as what we have seen in the last 2, 3 quarters. Largely also because, by this time last year, Q2 onwards, the full Vietnam FD capacity was in play, and therefore, a lot of these sales of FD is also built into the base itself. We did not see much of a proportion change. Having said so, we see that there is, as of now at least, a better demand for FD worldwide.
Shirish Pardeshi: Okay. Just last question. I could see there is lot of spends across media channels. If you can give me some color how it is impacting the revenue momentum in terms of our brand sales and the institutional sales.
Praveen Jaipuriar ): Brand, Sreek, as I was just mentioning that we are growing at 25%. Last year, because of a lot of price increases, we also got value growth. This 25% is backed completely by volume growth in the domestic market. We are growing very well. The best part is that the growth is coming from all channels, which is GT, MT, e-com, everything put together. There has been an all-round effort. In India, there is a little bit of a skew, especially in the non-strong coffee markets in the winter season and the festive season. We are also gearing up for that, putting up a lot of efforts both in terms of ATL and BTL during this. We hope to continue the momentum on the branded side as well.
Shirish Pardeshi: Okay. No, I was just more interested in knowing, have we adjusted any prices?
Praveen Jaipuriar ): Sorry. Your voice is breaking a little. Have we adjusted any?
Shirish Pardeshi: Have we adjusted any prices because of lower coffee prices?
Praveen Jaipuriar ): Yes. In the domestic market, there are SKUs where we had to drop prices. But the good thing is that we did not have much of an impact because, in some SKUs, we kept the prices at the similar levels also. Last year, if you remember, September, I think it was 20 September or so when the GST cuts were announced. So, the whole category and the whole industry had taken price drops. So did we. But there are certain SKUs post that we also, because of intermittently coffee prices and the energy cost had increased, so we had taken some price increase. So it is a mixed bag wherein there were price drops. There was also cases where there were price increases as well.
Shirish Pardeshi: Okay. Thank you and all the best.
Praveen Jaipuriar ): Thank you.
Operator: Thank you. Next question is from the line of Vivek Ganguly from TCG AMC. Please go ahead.
Vivek Ganguly: Yeah. Thank you for the opportunity. Can you just give an updated number on what the debt right now is and what is the rate of interest?
Praveen Jaipuriar ): I'll just ask CFO to chip in here.
Vivek Ganguly: Yeah.
Chaitanya Agasthyaraju ): The gross debt as at 30 September is INR 1,192 crores.
Vivek Ganguly: Right.
Chaitanya Agasthyaraju ): Net debt is around INR 742.
Vivek Ganguly: What is the rate of interest?
Chaitanya Agasthyaraju ): Sorry?
Vivek Ganguly: Rate of interest.
Chaitanya Agasthyaraju ): Rate of interest. The rate of interest has slightly gone up over the last one quarter or so. The average rate would still hover between 7% to 7.5%.
Vivek Ganguly: Okay. About 7.25% or 7%.
Chaitanya Agasthyaraju ): You can take it 7.25% as of now.
Vivek Ganguly: Sure.
Chaitanya Agasthyaraju ): Yeah.
Vivek Ganguly: Sure.
Chaitanya Agasthyaraju ): Depending on where the loan is taken.
Vivek Ganguly: Right. You all had given an indication that by the year-end, your debt would be in this INR 1,100-ish range. So given where you all are you likely to exceed that and get to three-digit numbers?
Chaitanya Agasthyaraju ): We will still maintain the guidance that we have given. Our initial guidance was that we will maintain debt between INR 1,000 to INR 1,200 crores of gross debt and net debt around INR 800 crores. Given that what we have ahead is a procurement season because of the Vietnam harvesting season. So there is a significant procurement and working capital may slightly go up. Therefore, we intend to maintain the guidance that we have already given.
Vivek Ganguly: Okay, great. Thank you. That is all from my side. Thanks.
Operator: Thank you. Next question is from the line of Abhishek Nawalkha from Nirmal Bang Institutional Equities. Please go ahead.
Abhishek Navalgund: Yeah, hi. Thanks for the opportunity. The first question is on EBITDA growth. I think after nine quarters back to back wherein our EBITDA growth has been consistently ahead of gross profit growth as well as volume growth, we have seen an 8% kind of a growth quarter. First, is there any one-off in the other expenses, particularly in Q2?
Praveen Jaipuriar ): Abhishek, not significantly. If you see the volume growth, as I was saying, between 10% to 15%, but EBITDA is around 10%. There is also, as I was explaining, all this while we also were getting a little benefit of our proportion change because freeze-dried demand was ahead of spray-dried. There is a lot of noise coming, Abhishek, from your end, I think. Or I don't know from where. Are you able to hear me? Hello? Abhishek, are you able to hear me?
Abhishek Navalgund: Yeah, a little sir.
Abhishek Navalgund: Yeah. I can hear you, sir. Yeah.
Praveen Jaipuriar ): Yeah. So what I was telling, Abhishek, is that, all this while you are also getting that benefit of a better proportion and all that, which now is in the base itself. Which meant that your EBITDA and the volumes will kind of move together. Yes, there is a little bit of a dip here and there, but these are, as I have been always telling that in a quarter you will see last quarter we saw a little higher growth of EBITDA than the volume. This quarter a little low and therefore it will all settle down to a long-term guidance that we had given of 15% or so. That is very much on the cards and that is where we are headed towards.
Abhishek Navalgund: Sure. My only question was basically last year we have seen a significant increase in per kg EBITDA also. So the impression which was given was maybe we will continue with that guidance, in terms of per kg. But this time even in H1, if I see our gross profit growth is significantly ahead of our volume growth. So we were under the impression that at the gross profit level, our mix is still improving. Maybe that is why my question was-
Praveen Jaipuriar ): No, so. Yeah.
Abhishek Navalgund: Basically whether the absolute EBITDA growth can be slightly ahead of volume growth or it will be exactly in line with 15%, like you are saying.
Praveen Jaipuriar ): Mostly in line, Abhijit, there could be a little at the end of the year because there is not only one thing that will play in terms of how the EBITDA will pan out. Apart from proportions, there are many other aspects that will come into play. So, it could be a couple of percentages higher also. I am not denying that fact. But our guidance remain that both will move in tandem with each other. In fact, if you remember, I had told this last time as well that once the bases are normalized of the same proportion of FD and SD, then the per kilo EBITDA, it is very unlikely that it will move significantly differently from the volume growth. That is why we had said that this year will be 15% and 15% type of growth. That is what we are likely to end the year at.
Abhishek Navalgund: Sure. Last question is on debt part. We have already seen significant amount of debt reduction in the H1 itself. Are we still on track in terms of the INR 4 billion debt reduction or you want to bring the debt down further from the current level there?
Praveen Jaipuriar ): No, just now Chaitanya just explained that we had given a guidance that the gross debt will be between INR 1,000 to INR 1,200 and the net around INR 800. We already have kind of got to that levels, but as we explained right now, going forward, the Vietnam crops are going to come in. That is the time there could be newer contracts that could come our way and therefore the buying could increase. So we are not changing the guidance as of now. Maybe closer to when we are meeting again in the Q3 con call, we probably will be able to give you the exact number how the year-end will look like.
Abhishek Navalgund: Sure. Sorry, sir, just one last one. Basically, you were saying that with the declining coffee pricing, we might see demand for freeze-dried increasing even further, maybe in the newer geography. Are you seeing anything of that sort playing out?
Praveen Jaipuriar ): Already the demand for freeze-dried since last year has been much higher than the spray-dried. If the coffee prices kind of continue to have this kind of a bearish trend, I have a belief that the freeze-dried demand will hold like it has been holding till now. We will have to just wait and watch how things pan out.
Abhishek Navalgund: Sure. Thank you and all the best.
Praveen Jaipuriar ): Yeah. Thank you, Abhijit.
Operator: Thank you. Next question is from the line of Rahul Maheshwari from Ambit Investment Advisors. Please go ahead.
Rahul Maheshwari: Yeah. Good morning, Praveen and entire team. Hope I'm audible.
Praveen Jaipuriar ): Yeah, Rahul, you're audible.
Rahul Maheshwari: Yeah. Couple of questions. First, can you give what is the capacity utilization for the domestic and the Vietnam as these two parts and currently, how we should look from next two, three years because the majority of the CapEx has been done for 75,000 ton. Also the spray-dried capacity in the Tirupati region, how that has been fared? That is the first question on the capacity utilization.
Praveen Jaipuriar ): Yeah. Rahul, we are like at an aggregate level, I do not want to, last time also I said that I will not break it down very deep, but I will give you a flavor. At an overall consol level, our capacity utilization is closer to 70 odd percent with freeze-dried utilization higher than this. The freeze-dried utilization is much faster. At least for the spray-dried part, we need not worry about the capacity for the next at least 2 to 3 years. Freeze-dried is something that we have to keep an eye on, because maybe at best, we may have 1 more year of, maybe in a year or year and a half, we could be very close to full utilization. Which means that we will have to see how do we augment the capacity.
Praveen Jaipuriar ): We have been looking at evaluating both that how do we kind of increase the capacity at our end. Also, we are seeing that is there any strategic partnership that we can do in the short term to make sure that the capacities are there to fuel the growth. That is on the capacity side and the question that you asked, again, not trying to break it up unit by unit, but there has been a similar sort of utilization even for the Tirupati unit.
Rahul Maheshwari: Just wanted, as you had guided for 15% as a volume growth, not just near term, but medium term also, you want to maintain the trajectory.
Praveen Jaipuriar ): Right.
Rahul Maheshwari: At what optimum capacity utilization you would have to go for a further capacity expansion? Because generally we have seen at 80% to 85%, you are just at a CapEx level.
Praveen Jaipuriar ): Correct. That stays true at 88, maybe, 85, you need to kind of go in for expansion because while we talk about rated capacity, a lot depends on how much of changes you are having, what kind of blends that you are taking out. Generally at 80, 85, we would be kind of initiating capacity expansion. That stays true. That is why I said for spray-dried, we are good for another 2, 3 years. We need not worry. But for freeze-dried, we are keeping a close watch on how the demands are shaping up and how our capacity utilization are there, so that we can take calls on the same.
Rahul Maheshwari: Just adjacent question to this, but before expanding the capacity, any debt levels you want to reduce it down so that it does not become a balance sheet thing?
Praveen Jaipuriar ): You know.
Rahul Maheshwari: I am not asking from near term 6 months perspective, but from a strategic direction perspective.
Praveen Jaipuriar ): No. Rahul, I think, today and last time, as you said, we are in a very comfortable position. If you remember last time when we were doing expansion, our top line used to be INR 2,000 crores and the bottom line was probably INR 200 crores PAT. But with the current position of the PAT itself which has doubled and the cash flows are very robust. Just now Chaitanya told you that at INR 1,100 crores gross debt, our net debt is around INR 740 crores. Which means that there is a INR 300, INR 400 crores of cash cushion that is there. If at all, if required, a lot of our now capacity expansion can be taken from a large part of it from internal accruals as well, right? So we are in a very comfortable position right now.
Praveen Jaipuriar ): So we are not thinking too much of putting that, "Okay, at this level I'll go for capacity expansion or at that level I'll go to capacity expansion." So we are good on that front, comfortable on that front. If at all capacity has to be expanded, I don't think so funding the CapEx will be of any issue at all at this point.
Rahul Maheshwari: Fine. And-
Praveen Jaipuriar ): I think Chaitanya just wanted to add a point. Sorry.
Rahul Maheshwari: Yeah.
Praveen Jaipuriar ): Yeah. Please go ahead.
Rahul Maheshwari: Yeah. The second question was regarding as the coffee prices has been declining, any shift in the consumers from a long-term contracts perspective? Because from last 2 years we were witnessing in your commentary that the customers are preferring short contracts. So are you witnessing some signs and any inquiry in pipeline which has been built up?
Praveen Jaipuriar ): So yeah, quite a bit of long-term contracts are coming back. But Rahul Maheshwari, as I was telling you that customers or the clients are a little on a wait and watch when the prices are rising. At the same breath, I was saying that stability of prices is more important than a higher level or a lower level. And what has happened is that even now the prices keep fluctuating, and that is the reason sometimes the clients are a little still on a wait and watch that while the prices have fundamentally come down, the fluctuation still holds true. So in fact, last 3 months I've been seeing that every day there is a fluctuation between $50 to $100 per day. So one day it goes up, one day it comes down. So it keeps the client still on their toes.
Praveen Jaipuriar ): But having said so, because the price stable has come down, at a broader level, we are seeing a lot many more medium and long-term contracts coming back.
Rahul Maheshwari: Right. Last question from my end. Any wallet share increase you are witnessing from your existing clients and any new client addition that has taken place? Any client run rates-
Praveen Jaipuriar ): Yeah
Rahul Maheshwari: that you can guide? Yeah.
Praveen Jaipuriar ): Rahul, again, these are continuous process. There are instances where we have seen wallet share increases. There are clients where we have increased wallet share. Again, there are new clients that have been added. We have been speaking about our initiatives in the Far East, which two years ago when we were doing the conf call I had said that we are seeding the market and we are trying to kind of get new clients from that side because that has been not so strong geography for us. We are seeing the results now. We are getting a lot of new clients from that market as well. Both the things are happening. There are wallet share increases and the new markets also are doing well for us.
Rahul Maheshwari: Any client we have lost or any such-
Praveen Jaipuriar ): There would have been, yes, absolutely. This is a business. I cannot say that I haven't lost a client. It will be a scenario, but there is no significant loss. There is no big client loss. There is no significant loss. Yes, there are so many small clients who keep coming and going. Business is always, as I always say that it's a leaking bucket. So we just need to make sure that a good proportion of your clients stay intact and your tap is bigger than your leak.
Rahul Maheshwari: Sure. Best wishes to you and your entire team. Thank you.
Praveen Jaipuriar ): Yeah. Thank you.
Operator: Thank you. Next question is from the line of Ashay Chheda from Canara Robeco. Please go ahead.
Akshay Chheda: Yeah. Thank you for the opportunity. Sir, just one question, sir. This is on the other expenses. Sir, is there any one-off in this quarter? Because typically for the large part of FY26, we were at around INR 140, INR 150 crores, but that has now gone to INR 190, INR 200 odd crores. Is it that the freight or the insurance fees that we are unable to pass on the export side or is it that higher A&P spends for the domestic business? Basically just trying to understand these other expenses, why it is appearing little on the higher side.
Praveen Jaipuriar ): Yeah. I think what you mentioned, there is an increase in freight cost and insurance cost and all that is there which is leading to this increase. But we are also able to pass. Yes, of course, once any CIF contract which you have done and the prices have increased, you have to take it up in your pocket. But most of it as and when the price increases are happening, we are able to pass that through. Now what happens is that when even if you convert, let's say, the FOB contracts to CIF contracts and you are passing on to the clients, your top line also goes up and the expense comes down and sits here. So optically it looks like that it has gone up, but at an operational profit level, you will see that there is no impact of that.
Akshay Chheda: Okay. Got it, sir. Thank you.
Praveen Jaipuriar ): 10%.
Operator: Thank you. Next question is from the line of Abhishek Mathur from Systematix. Please go ahead.
Abhishek Mathur: Yeah. Hi, Praveen, sir. Thank you for the opportunity. Just on the EBITDA again, sir, for the Q2, specifically, the EBITDA per kg, has it slipped below the INR 130 level slightly? Is that correct to assume? And also
Praveen Jaipuriar ): No, not really. Yeah. Sorry. Go on. Yeah.
Abhishek Mathur: Okay. Is it between INR 130 to INR 135? Is it the range that we should be looking at?
Praveen Jaipuriar ): I think INR 135 to INR 140 we had said last time. That is where it stays.
Abhishek Mathur: Yeah.
Praveen Jaipuriar ): Yeah.
Abhishek Mathur: Even for the second quarter as well?
Praveen Jaipuriar ): Yes.
Abhishek Mathur: Great. I was asking, sir, you spoke about the mix, the proportion in terms of FDCs, small packs, etc.
Abhishek Mathur: Apart from the mix, any other factors that we should be watching out for when we think about the changes in EBITDA per kg?
Praveen Jaipuriar ): No, not really. Because, again, like I have been guiding for last three, four quarters, because the proportions or let's say the product mix are now in the bases, I don't see much of an. Because a lot of people had asked that will the EBITDA per kilo still increase. To that, I had said that while we are making efforts, there are various things that goes into deciding EBITDA per kilo. I don't see that changing either downwards or upwards. It will kind of follow the volume growth profile. There won't be any change there.
Abhishek Mathur: Got it, sir. Secondly, sir, just going on to the international branded business, I think this is an area that we don't talk about much on our calls.
Praveen Jaipuriar ): Right.
Abhishek Mathur: But you have talked about Percol in the recent past. I think you indicated a revenue number of INR 26 to 27 crore, where it is at right now.
Praveen Jaipuriar ): Right.
Abhishek Mathur: You have talked about expansion in the Middle East as a near-term area of.
Praveen Jaipuriar ): Right.
Abhishek Mathur: So, if you can just talk about the overall international branded business, how big is it? Are there other pieces apart from Percol? For Percol itself, what is the growth and what kind of margins that we are talking about? Also any other pieces of the international branded business that we don't typically talk about much, if you can spend some time talking about these. Yeah.
Praveen Jaipuriar ): Percol continues to grow. Again, it is a very different geography, UK, wherein you have to keep doing the re-listing, recontracts with the chains. But we have got some good responses from there. As of now, we are looking at a similar kind of a number between INR 25 crore to INR 30 crore that we will end this year at. Having said so, we had indicated that maybe 1, 2 years, because we are investing behind the brands also, maybe INR 1 crore or INR 2 crore of loss at an annualized basis. Hopefully by next year, we should start seeing some profits also coming from that front. As far as expansion is concerned, yes, we have been kind of working with a lot of chains and distributors across many countries.
Praveen Jaipuriar ): For example, now we probably have got if you remember, along with Percol, we had bought some another 3, 4 brands. We had said that depending on the geography and depending on strategy, we will use these brands. Percol was a certified coffee, but there were a couple of other brands like London Blend, Perk Up that we had bought at that point of time. 1 or 2 brands, very soon, we have finalized the deals with couple of chains in the US market for 1 or 2 of these brands. They will be launched very soon. We have officially launched our brand in the Nepal market. In fact, we are doing some marketing activity as well, sponsoring one of their cricket leagues, which is going live on 26 October this year. Vietnam, again, we are trying to build the branded business.
Praveen Jaipuriar ): Hopefully, in a quarter or so, we will start seeding the market or at least test marketing some of the stuff there. Lots of these things are happening. Even Middle East, in fact, our team is going next week to meet a couple of distributors to see what all things we can do there. This is a little brief on our efforts on the international B2C front.
Abhishek Mathur: Got it, sir. Apart from this INR 25 crore to INR 30 crore of Percol that you quantified, overall, what is your estimate of the overall-
Praveen Jaipuriar ): These are all negligible. These are all just seeding happening. Maybe INR 1 crore or INR 2 crores more of billing could come. But that we will see. But not very worthwhile as of now because these are all seeding activities that we are doing.
Abhishek Mathur: Currently, if I say that probably the international branded business would be maybe INR 30 crores, INR 35 crores, would that be a correct assumption?
Praveen Jaipuriar ): Yeah, around INR 30 crores you can take that.
Abhishek Mathur: Got it, sir. That is all from me. Thanks and all the best.
Praveen Jaipuriar ): Yeah. Thank you.
Operator: Thank you. Next question is from the line of Akhil Parekh from 360 ONE Capital. Please go ahead.
Akhil Parekh: Hi. Thanks for the opportunity. Congratulations to the entire team. I think it is a very resilient performance in tough times. My question is on the branded business. H1 it did, I think closer to-
Operator: I am so sorry to interrupt, Mr. Parekh. If you are using any external device to speak, can you please disconnect it and use your handset mode?
Akhil Parekh: Sorry. Is it better now? Hello? Yes.
Praveen Jaipuriar ): Thoda better. I think thoda better.
Akhil Parekh: Okay. Sir, your branded business guided for INR 550, 600 crore last quarter, right, for the full-year 2027. You maintain that the H1 was INR 250, 260 crore.
Praveen Jaipuriar ): How much did we What did we guided INR 550 ke aas paas, no?
Akhil Parekh: 550, yeah. 550, 600.
Praveen Jaipuriar ): Yeah. That will remain because abhi thoda the sales increases. I told that in India, there is a bit of seasonality.
Akhil Parekh: Correct.
Praveen Jaipuriar ): The sales will increase in the third and fourth quarter. That guidance, we are maintaining that.
Akhil Parekh: And sir, anything on the market share gains, like quick commerce, you had highlighted, we are closer to double digits and I can see availability on quick commerce players, including Amazon.
Praveen Jaipuriar ): Yeah.
Akhil Parekh: Any update on the market share gains from the quick commerce channel specifically?
Praveen Jaipuriar ): Nothing significant. Actually, last time when we spoke, the kind of numbers that we had given, there is a constant increase. It's not that it's not there, but this quarter, I can't say that from last quarter there has been a lot of increase. We continue to maintain that kind of a momentum, and we are trying to see that in platforms where we still are weak or geographies where we are weak, how can we increase that?
Akhil Parekh: Sure. That's all from my side. Thank you so much and best luck.
Praveen Jaipuriar ): Yeah. Thank you.
Operator: Thank you. Next question is from the line of Sohum Samanta from Motilal Oswal Financial Services Limited. Please go ahead.
Soham Samanta: Yeah. Thank you very much for the opportunity, sir. A couple of questions. One is that when we are saying that FDC expansion will be coming maybe next one and a half year down the line, is there anything we have thought? Is it more than 10,000 plus ton, or any thought over there, or when you are saying the third party we can manage, is it in Vietnam or any other country we are looking?
Praveen Jaipuriar ): Sohum, we have not decided, so I cannot give you a very definitive answer, but it will not be 10,000 ton. Generally, FD, if you would have noticed, we generally have added 6,000 tons every time we have expanded capacity. So most likely, if at all we were to add capacity, it will be in that range of 6,000, right? Now, whether it will be in Vietnam or India, both places we can do expansion because at both places we can do brownfield expansion of another 6,000 tons. So let us see how things pan out. We have not taken a call, as and when we do it, we will keep you informed.
Soham Samanta: Second is that when, if you look last almost a year, coffee price has been stabilized or coming down. Is it the only reason that people are shifting from SDC to FDC or some actual premiumization is going on in the coffee market?
Praveen Jaipuriar ): No, actually, that is not the reason. It is not because of coffee prices. What I had told earlier is that what happens is that when the coffee prices come down, obviously the end prices also come down, right? For especially when the prices come down for premium products, there is a tendency, it is not just coffee, for any product, if the premium segment pricing comes down, there is a tendency for people to upgrade, right? Premiumization happens. This is happening across categories. We are seeing that there is a trend of premiumization that is happening. So that is happening in coffee as well. So we are seeing that trend, and this trend got a little accentuated when the coffee prices started coming down. So that was the correlation we were trying to kind of form.
Praveen Jaipuriar ): As of now, the momentum for FDC is still there, so we are looking forward that this momentum could continue, and accordingly we will have to take calls on how do we kind of supplement our capacity on that front.
Soham Samanta: Thank you very much, sir.
Praveen Jaipuriar ): Thanks.
Operator: Thank you. Next question is from the line of Bhavya Sonawala from Samaasa Capital. Please go ahead.
Bhavya Sonawala: Yeah, thank you for the opportunity. Am I audible?
Praveen Jaipuriar ): Yeah, Bhavya, you are audible.
Bhavya Sonawala: Yeah. Just one question. I think previously you have mentioned that in terms of a capacity or in terms of supply globally, we are a high single digit, right? About 9%, 10% of capacity globally that we have.
Praveen Jaipuriar ): Right.
Bhavya Sonawala: Just on a longer term view, just trying to understand when do we see this coffee kind of maturing and when do we see another adjacency that you have spoken about previously come and kind of take hold of growth? Is it too early to think about that and we see enough growth coming from coffee itself? Can you kind of talk about that?
Praveen Jaipuriar ): Bhavya, I think, yes, it is too early because we are still single digit, as you rightly pointed out, single digit in the market share in the B2B segment globally. There is enough and ample scope to grow. We have been saying that we are seeding a lot of growth initiatives across the globe to make sure that this growth momentum, at least in the medium term, keeps growing at the rate that we have been guiding of around 15% or so. That should stay intact.
Praveen Jaipuriar ): But at the same time, the other initiatives that we are building, like the B2C initiative or getting into some of the other categories in the FMCG space, hopefully by that time when we have kind of seen that, okay, the growth could kind of come down once we have attained maybe a 14%, 15% market share globally in the B2B side, then hopefully this initiative itself will become big enough to drive the growth for the overall company. Again, we have been thinking both short, medium, and long term to make sure that in the long term as well, the growth momentum is intact.
Bhavya Sonawala: Understood, sir. Thank you. That was just my question. Thank you.
Operator: Thank you. Next question is from the line of Akshay Chandak from ICICI Lombard. Please go ahead.
Akshay Chandak: Yeah. Hi, sir. As we are planning to add capacity in FDC, maybe in one or two years when the capacities are utilized, just generally wanted to understand, what is the lead time in FDC machines?
Praveen Jaipuriar ): Generally, it will take nine to 12 months to put the project.
Akshay Chandak: Okay. And machines availability is not an issue in FDC?
Praveen Jaipuriar ): That is not an issue. Yeah. Machines availability is not the issue.
Akshay Chandak: Where we source.
Praveen Jaipuriar ): We source from many this thing. I have been telling you that when we put up a project, we do not take the full thing from just one supplier. We take, there are suppliers in Brazil, there are suppliers in Europe from where we could source the roasters, and then we do a lot of work on the line, internal work also we do in terms of our extraction capabilities and all. There are many source points, and there is not one single supplier that we are dependent on.
Akshay Chandak: Okay, got it, sir. Thanks.
Operator: Thank you. Next question is from the line of Mr. Dipak Saha from Ashika Institutional. Please go ahead.
Dipak Saha: Hi. First, congratulations on the numbers. Just a couple of things. On the capacity expansion side, if you can help us understand, for the FD capacity expansion to 6,000 tons or what the number that we do, is there any meaningful difference on the CapEx cost compared to what we did earlier?
Praveen Jaipuriar ): I do not think so. Maybe we can add some inflation cost to that, but it will not be very different from what we did, around maybe INR 500 odd crores we did last time, if I am not wrong. So it will be around that range itself.
Dipak Saha: Got it. Fair enough. My second question is on the B2C side. We were doing a lot of this Malgudi brand-related trials across the touchpoints. What is the feedback that you are getting and anything incrementally that you can share on the Malgudi or any additional trials that we are planning?
Praveen Jaipuriar ): Two things, I think, Deepak, we have spoken about. One was Malgudi Snacks, and while we are still in the test market stage, we have added a couple of more products. We added one more product, which is banana chips to the portfolio, and we are adding a couple of more by this quarter end as well. The response has been pretty encouraging. We have seen a decent amount of off-takes that have started coming in. Although it is very small, once we scale it up, that will be the real test. On the test market front, we have got very encouraging response. On the Continental, if you remember, we had spoken about the tea segment that we are getting into.
Praveen Jaipuriar ): From there also, we are getting pretty decent response. We were very pleasantly surprised because there are some pockets where Continental now has got very good brand equity. That brand equity and distribution that we have is rubbing on to some of these categories, and we are seeing good amount of off-takes as well. Hopefully, these look to be good to expand from here on. We will take a little more time to just make sure that everything is right in terms of one product and the off-takes happening, and then we will kind of expand. I think the responses have been pretty good.
Dipak Saha: Got it. Thanks a lot, and all the best for rest of the quarter, sir. Thank you. Thank you, Deepak.
Operator: Thank you. Next question is from the line of Deepak from Sundaram Mutual Fund. Please go ahead.
[Analyst] (Sundaram Mutual Fund): Yeah, thank you for the opportunity. Am I audible?
Praveen Jaipuriar ): Yeah, Deepak, you are audible.
[Analyst] (Sundaram Mutual Fund): Yeah. Hi, sir. Sir, first of all, congratulations on once again delivering a double digit sort of volume growth and continue to gain market share. I had two questions. My first question is on, again, the other expenses front. This quarter, we have seen a sharp increase in other expenses, let us say at around INR 200 crore in absolute terms. Now, if I have to further break it down, all this incremental other expenses spike is coming from our standalone entity. Just wanted to clarify, is it because that in this quarter, we have upped our marketing spend to grow our Continental brand business? Do we expect some sort of normalization in Q3 quarter onwards?
Praveen Jaipuriar ): Two things, Deepak. I think one thing you mentioned, let me start first with, yeah, we have got 10% volume growth. The 10% volume growth will mean that there will be 10% increase in the cost. That is one reason why it increased. Second, you are right, we have been kind of increasing our marketing spends to make sure that we keep gaining market share and be aggressive in the domestic market. That is also there. The third thing is that there has been a bit of increase in the freight and fuel cost that has also contributed to this. If you add all of these three reasons, none of them very significant, but all of them three added, you will see the increase.
Praveen Jaipuriar ): I had explained to answer one of the previous questions, which was similar to what you have asked, is that even if you pass on the freight costs in terms of the CIF contracts, it gets added to the top line. Ultimately, the profit on a per kilo basis remains intact. That is the thing. There is nothing, I do not know whether I should say whether it will normalize or not normalize. To me, it is actually normalized now only. What I would say is that as we are guiding that 15% volume growth, we will give you that similar kind of a EBITDA growth also because our EBITDA per kilo will more or less remain intact.
[Analyst] (Sundaram Mutual Fund): Got it. We are confident that we will be able to maintain that to 130 to 140 bag of per kg.
Praveen Jaipuriar ): Absolutely.
[Analyst] (Sundaram Mutual Fund): Okay. Second question, because since we are growing our volume in double digit, if I do a simple back calculation, by FY28, we will be reaching a sort of optimal capacity utilization at 85% to 90%. Right.
Praveen Jaipuriar ): Right.
[Analyst] (Sundaram Mutual Fund): I am pretty sure that CCL as a company, you would want to continue that double-digit growth rate beyond FY28 also.
Praveen Jaipuriar ): Absolutely.
[Analyst] (Sundaram Mutual Fund): Given that we have a lead time of 9 to 12 months, be it FDC or SDC, would it be fair to assume that we should expect some kind of capacity expansion announcement, let us say by Q4 of this fiscal year? Provided that we have an aspiration to grow a double digit beyond FY28 and the lead time of 12 months.
Praveen Jaipuriar ): Yeah. You are right, but just a small caveat to this. I also spoke about doing some strategic partnerships and all that. You are right, by Q4 or Q1 of next year, either we decide upon the capacity expansion, or at least in the FDC front, or we say that, at least for another year or so, we probably will supplement the capacities with some strategic tie-ups till we are very confident for the next expansion. Both the things are possible. You are right. We should be hearing something at least end of Q4 or starting Q1 next year.
[Analyst] (Sundaram Mutual Fund): Okay. Sir, when you talk about this strategic expansion, I presume that it will be more like a contract manufacturing arrangement rather than a JV route where you will be contributing equity. I just wanted to understand that.
Praveen Jaipuriar ): Could be both. I cannot say what route we will go.
[Analyst] (Sundaram Mutual Fund): Okay.
Praveen Jaipuriar ): Because now we are in a position where we can at least evaluate maybe four years or five years down the line, an equity route, I would have said no upfront. Today, considering the strength of our balance sheet and the way things are going and the cash generation that is happening with the current business, I think at least we are in a position to evaluate various options and take a call whichever suits us best at that point of time.
[Analyst] (Sundaram Mutual Fund): Got it. Our aspiration stays intact that you want to grow our volume at double digit even beyond FY28.
Praveen Jaipuriar ): Absolutely. That is the aspiration, and we want to make sure that we fuel that aspiration through whatever means and ways that we can, either through our own capacity or strategic tie-up, both by contract manufacturing or any joint venture or anything like that. We will keep our options open is what I am trying to say.
[Analyst] (Sundaram Mutual Fund): Okay. Sir, when we talk about strategic partnership, would it be fair to assume that because it is a strategic partnership there, our margins could be little lower than what we are doing on our own standalone basis?
Praveen Jaipuriar ): Could be. Again, as I was telling for FDC, we make sure that at least there is a certain amount of confidence and an underwriting of the volumes before we go ahead and put a plant, because these plants are expensive in the sense that you have to keep running this plant 24 by 7. You cannot keep at least right from the word go, you need to make sure that at least 30% to 50% of the capacity is underwritten. That is why we keep a little more cautious step when it comes to FDC.
[Analyst] (Sundaram Mutual Fund): Sure, sir. Very helpful, sir, and all the best for the future.
Praveen Jaipuriar ): Thank you.
Operator: Thank you. Next question is from the line of Nitya from Kamayakya. Please go ahead.
Nitya Shah: Hi, sir. Thanks for the opportunity. Just wanted to know more about if there are any plans for any kind of acquisition, considering our balance sheet is a lot stronger.
Praveen Jaipuriar ): We are evaluating. We are not saying that definitely we want to do an acquisition, but if something which is worthwhile and it is well-priced and fits into our strategic thinking and the way forward that we have decided for ourselves, if something lucrative comes our way, we will definitely evaluate and be happy to do that.
Nitya Shah: Is the priority more towards something that is non-coffee, adjacencies to your existing business? That would be a more ideal fit for acquisitions, or would it be something more along the coffee space internationally?
Praveen Jaipuriar ): Both is possible. If there is some coffee like we did with Percol, if there is some other brand that is available. International valuations are generally quite lucrative. If any coffee brand comes our way, which we think is worthwhile taking it forward, we will be open to that as well. Even in India, at least adjacencies are also something that we are keen to look at.
Nitya Shah: Can we expect something in the current financial year itself, or is that a while for it according to like you mentioned, you know, broader idea?
Praveen Jaipuriar ): I do not think so, Manan, we will be able to answer that because you never know what comes your way. These acquisitions are a matter of a huge amount of not just strategic intent, but also requires a lot of due diligence and other aspects as well. So it would be difficult for me to comment whether something is coming this year or next year.
Nitya Shah: Got it, sir. Thank you and congrats for another set of good numbers.
Praveen Jaipuriar ): Thank you.
Operator: Thank you. Next question is from the line of Aashish Upganlawar from InvesQ PMS. Please go ahead.
Aashish Upganlawar: Yes, sir. Just one question on the gross margins for this quarter. I do not know whether I missed a point on that, but when I calculate it for this quarter, it comes to like 62%. It is down by about 200 basis points or 300 basis points year-on-year or quarter-on-quarter. In a declining coffee price or a stable coffee price environment, why should this happen is my question, because you stated EBITDA on 135 to 140 per kg remains intact, right?
Aashish Upganlawar: Where am I missing a point?
Praveen Jaipuriar ): You are not missing a point. Very simply. One, do not look at gross margins because what happens is that a lot of our contracts are FOB, then it gets converted sometimes to CIF and things like that, which will make the gross margins look a little different from each other. What you should look at is the EBITDA. Yes, there is a little bit of a lesser, if you were to track our performance for the last many, many quarters, you would have seen that our EBITDA has always grown higher than the volume growth for many, many quarters. This quarter, there was a little maybe because EBITDA grew by 9.5% and our volume growth was between 10% to 15%, which means that there is a little dip.
Praveen Jaipuriar ): That is explainable because a lot goes into deciding the EBITDA, the product mix, the kind of small pack, large packs, proportions, and things like that. The premium customers versus premium blend versus not so premium blend. There are many factors that go, and a quarter there could be a little ups and downs here. But the long-term guidance that we have given, and in the past also if you were to see our guidance, we kind of stuck with that. This year also we are saying that we will be 15% volume and a similar EBITDA growth will happen, and that we are fully on track.
Aashish Upganlawar: Okay. And sir, is there anything to judge on the near future of the coffee prices? Historically, it has always been a guess, which may sometime come right, sometime come wrong, given the complexities. From a production perspective or a crop perspective, is there anything fundamentally to take away how it could be for the next six months, nine months? I understand the speculative part of it, but purely on the production and fundamentals of the availability of supply and demand, basically.
Praveen Jaipuriar ): The exact picture we will know in December, because as I was telling you a while earlier, there has been a mixed report. Of course, there have been reports of El Niño, and that we are seeing in the Southeast Asian markets, the agri-crops have taken a hit. Vietnam is the next crop that is going to come for coffee and the El Niño danger is there as well. That is on the bad news side part of it. The good news is that there are also reports that the crop till now has been holding up reasonably good. It looks like there will be a good harvest. The good point is that even pre-harvest, even at a speculative level, the prices have not shot up to alarming levels.
Praveen Jaipuriar ): At least on a personal level, and that is my personal view, things look far more settled than what the news is coming around. Hopefully we will see a settled price only after December. Again, these are my personal views. We will have to wait and watch for December to see exact trends how they are emerging.
Aashish Upganlawar: Okay. Whatever you are collecting from
Operator: I am so sorry to interrupt, Ashish. Please rejoin the queue for more questions.
Aashish Upganlawar: Okay.
Operator: Thank you. Ladies and gentlemen, we request you to kindly restrict your questions to one only. We will take our next question from the line of Manish Mahawar from Antique Stock Broking Limited. Please go ahead.
Manish Mahawar: Yeah. Hi, Praveen. I hope I am audible.
Praveen Jaipuriar ): Yeah. Manish, you are audible.
Manish Mahawar: Yeah. So just only one bookkeeping question. In the other expenditure, I think couple of question came, right? Just wanted to know what
Manish Mahawar: is the Forex gain last year in Q2 and this year Q2. Why am I asking
Praveen Jaipuriar ): We're not going to the Uh-huh.
Manish Mahawar: No. Why I'm asking
Praveen Jaipuriar ): Sorry
Manish Mahawar: because cash flow, if I look at your cash flow, right?
Manish Mahawar: If H1 of the last year in a cash flow, your Forex gain was around INR 40 odd crores, INR 39 odd crores.
Manish Mahawar: This year,
Manish Mahawar: around INR 11 crores was the number, right?
Manish Mahawar: That is the same impact on the P&L, I think. That could lead to some drop in your EBITDA per kg and the other expenditure increase.
Praveen Jaipuriar ): Yes, you are right.
Manish Mahawar: Maybe if you can highlight that number.
Praveen Jaipuriar ): You have spelt out the numbers, so I need not highlight any more on that. But you are right, of course, because last year there was a little higher depreciation than what it has happened this year for rupee.
Manish Mahawar: Okay
Praveen Jaipuriar ): little advantage was there in the last year built into the basis. But if you remember, Manish, we have said that even beyond those advantages, what we had guided, that we still will grow at 15%, that is what we are kind of sticking into it without going into the nitty-gritties. Again, there are things which pull us down, there are things which push us up, but at 15% is what we are guiding.
Manish Mahawar: Sure.
Praveen Jaipuriar ): But you are right. Your observations are right.
Manish Mahawar: Okay. Only secondly on the extension of this question. Basically, EBITDA per ton, usually if you look at last maybe five, six quarter, we are consistently hitting the INR 130, INR 140 per kg of EBITDA, right?
Praveen Jaipuriar ): Right.
Manish Mahawar: Just wanted to know at once we reach toward the 77,000 ton of metric ton for capacity full utilization, what could be the EBITDA per ton or per kg you expect?
Praveen Jaipuriar ): Manish, again at the cost of repeating, I don't see significant change from here because, if you see our FD utilization is better, which means that already in the base the proportion of FD is higher. So maybe the product mix advantage may not be there. But at the same time, a betterment in terms of small pack volumes, a betterment in terms of better speciality coffee. The domestic incremental volumes are coming at a much better clip now. So all of that will help us better it. But again, product mix, I don't see much of an advantage coming from that front. Therefore, I don't see much of a change in EBITDA per kilo going forward from here.
Manish Mahawar: Okay, understood. That's clear. All the best. Thanks.
Praveen Jaipuriar ): Thank you.
Operator: Thank you. Next question is from the line of Naveen Kaushik from ITUS PMS. Please go ahead.
Navin Koushik: Yeah. Am I audible?
Praveen Jaipuriar ): Yeah, you are audible.
Navin Koushik: Yeah. Congratulations on a good performance for the quarter, sir. I just had one question regarding our comfort of tying up with third-party partners for FDC capacity. My understanding is that the ramp up, or rather the traction we have been seeing with FDC has only been accelerating. So in an environment, let us just say, where we are seeing interest rates also inch up slowly, and the Vietnam crop is still an uncertainty when it comes to the next one year or so. So in an environment where we will have to make a very conscious decision about allocating capital towards working capital or debt reduction or a potential M&A, and if you see a lucrative opportunity or capacity addition, how will we exactly make the decision and how comfortable will we be when it comes to keeping the third party stuff going on?
Navin Koushik: How long will we be okay with that versus do you want to bring it back inside and manufacture on your own? That is really the question.
Praveen Jaipuriar ): The third party or let's say the contractual manufacturing or the strategic tie-up, whatever is there, strategic tie-up, if it is about a joint venture or something, of course, that becomes long-term. But apart from that, the other things will obviously be short-term. It won't be very long-term. It's only to make sure that we don't fall short of capacity if there are growth opportunities. That will be very opportunistic in nature. The only reason why we do that is because that helps us get that confidence that the new capacity that we may end up putting, there is a certain underwriting of the capacity that happens, and therefore, we are confident that the new capacity is worth putting.
Praveen Jaipuriar ): Capital allocation, yes, you're right, there we require capital allocation for, let's say, if the coffee prices were to increase, so make sure that working capital is intact. At the same time, if we were to put it on the CapEx, then that also throws up a challenge. But considering the kind of balance sheet position that we are in, I think that shouldn't be a problem at least in terms of deciding one versus the other, right? There could be a scenario wherein both the things are happening in terms of coffee prices also increasing, and therefore, we require more of working capital. At the same time, we want to put CapEx. I think both are possible, and we will be able to do that. You are seeing that already there is enough cash flow in the system.
Praveen Jaipuriar ): There is enough cushion of cash in the system. None of the things will be either/or, and therefore, capital allocation will not be a problem or will not come in our way of fueling growth.
Operator: Thank you, sir. Ladies and gentlemen, we will take that as the last question for today. I now hand it back to the management team for closing comments.
Praveen Jaipuriar ): Thank you all for joining the call. Wishing you all very happy festivities, and we will look forward to connect with you after the third quarter results. Thank you Team Ashika for holding this call. Thank you.
Operator: Thank you. On behalf of Ashika Institutional Equities, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.
