Thanks, Iqra. 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 30th September 2026 are: Mr.

Praveen Jaipuriar, Chief Executive Officer; Mr. Chaithanya Vissa [Radhi?]

, Chief Financial Officer; Ms. Sridevi Dasari, 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.

Yeah. Thank you, Dipak, and thanks for Ashika Securities team and Iqra for hosting us and this call.

Good morning, everyone. I welcome you all to the second conference call of FY26-27.

Now let me give a brief overview of the company's performance for the second quarter and the half year ended September 30th, 2026. The group has achieved a turnover of ₹1,215.99 crores for the second quarter as compared to ₹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.

Because of the green coffee prices coming down, the value growth trails the volume growth, which stands at double digit. The EBITDA stands at ₹217.3 crores as against ₹198.6 crores, which is a growth of 9.5%, while the profit before tax is ₹150.86 crores, growing at 18.7%, and the net profit stands at ₹130 crores with a growth of almost 29%.

As far as H1 is concerned, the group has achieved a turnover of ₹2,419.58 crores as compared to ₹2,186.25 crores, which is a growth of approximately 11.6%. The EBITDA stands at ₹414 crores as against ₹360 crores, which is a growth of almost 15%, and the PBT, which is at ₹279.88 crores, is growing at 26.48%, and the net profit, which is at ₹246.96 crores for the first half, is growing at 42%.

[clears throat] The domestic business has achieved a gross turnover of ₹210 crores this quarter, out of which the brand sales is approximately 140- ₹140 crores. 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 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, and the Vietnam crop, which is slated to come around November-December time, is the time which will decide the future price trends for coffee. The good thing is that, even before the crop, the prices have held on to these levels, which is a good sign.

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.

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%? No, it's in the range of 10% to 15%.

Okay? It's in the range of 10% to 15%.

Okay. One follow-up here, I think we have been seeing coffee prices is declining and the customers were also not stocking up.

Is the inventory level, I would assume that inventory level would have normalized now,

and

hence the order book growth looks very strong at this time because coffee prices might further decline or remain stable?

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, it has, 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 happen 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, while there are news of El Niño and from some pockets floods as well.

There are conflicting reports that is coming from the market, but 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 that direction to evolve by November-December.

Every year, we see that November-December is the time we start getting more contracts into the order book. Generally and same is the case when 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 quarter three, quarter four 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.

Okay. Now, I was just trying to check, is there any distortion between FD and spray-dried volume growth?

Of course, two things, Shirish. FD, our utilizations are much better.

The FD demands in the world market has been better than the SD demand. As far our proportions are concerned, it is very much same as what we have seen the last two, three quarters, largely also because, by this time last year, second quarter 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 didn't see much of a proportion change, but having said so, we see that there is, as of now at least, better demand for FD worldwide.

Okay. This last question.

I could see there is a lot of spends across media channels. Is that if you can give me some color how it is impacting the revenue momentum in terms of our brand sales and the institutional sales of India?

Brand, Shirish, has just I was, mentioning that we are growing at 25%. Last year, because of a lot of price increases, we also got value growth, but this 25% is backed completely by volume growth in the domestic market.

We are going very very very well, and 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 all-round effort, and, 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 doing, 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 on the branded side as well.

Okay. No, I was just more interested in knowing, have we adjusted any prices?

Sorry, your voice is breaking a little. Have we adjusted any?

Have we adjusted any prices because of lower coffee prices? Yes,

yes. In the domestic market, there are SKUs where we had to drop prices.

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 20th September or so when the GST cuts were announced.

The whole category and the whole industry had taken price drops, did we. There are certain SKUs post that we also, because of, intermittently coffee prices and the energy cost had increased, we had taken some price in.

It's a mixed bag wherein there were price drops and there was also cases where there were price increases as well.

Okay. Thank you, and all the best.

Thank you.

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?

I'll just ask CFO to chip in here.

Yeah. The gross debt as at 30th September is ₹1,192 crores.

Right.

Net debt is around 742.

What is the rate of interest?

Sorry? Rate of interest.

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%. About 7.25% or 7.?

You can take it 7.25% as of now.

Sure.

Depending on where the loan is taken.

Right, right. You all had given an indication that by the year-end, your debt would be in this 1,100-ish range.

Given where you all are, are you all likely to exceed that and get to three-digit numbers?

We still maintain the guidance that we have given. Our initial guidance was that we'll maintain debt between ₹1,000 to ₹1,200 crores of gross debt and net debt around ₹800 crores.

Right. Given that what we have ahead is a Vietnam harvesting season.

There will be a significant procurement, and working capital may slightly go up. Therefore, we intend to maintain the guidance that we already given.

Okay. Thank you.

That's all from my side. Thanks.

Yeah. Hi.

Thanks for the opportunity. Sir, 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 a 8% kind of a growth quarter. First, is there any one-off in the other expenses particularly in 2Q?

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 little benefit of our proportion change because freeze-dried demand was ahead of spray-dried. There's 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?

Yeah. Okay.

I'm able to hear you, sir. Yeah.

Yeah. What I was telling Abhishek is that, all this while you were 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.

These are, as I have been always telling, that in a quarter, last quarter, we saw a little higher growth of EBITDA than the volume. This quarter, a little low.

Therefore, it will all settle down to a long-term guidance that we have given of 15% or so. That is very much on the cards, and that is where we are headed towards.

Sir, my only question was basically, last year, we have seen a significant increase in per kg EBITDA also. The impression which was given was maybe we'll continue with that guidance in terms of per kg.

This time, even in 1H, if I see our gross profit growth is significantly ahead of our volume growth. We were under the impression that at the gross profit level, our mix is still improving.

Maybe that's why my question was basically whether whether the absolute EBITDA growth can be slightly ahead of volume growth, or it will be exactly in line with like 15% like you're saying?

Mostly in line, Abhishek. 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. It could be a couple of percentages higher also.

I'm 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, very, very unlikely that it will move significantly differently from the volume growth.

That is why we have said that this year will be 15 and 15 type of growth. That is what we are likely to end the year at.

Sure.

Sure. Last question is on debt part.

We have already seen significant amount of debt reduction in the first half itself. Are we still on track in terms of the ₹4 billion debt reduction or there can be or you want to bring the debt down further from the current levels as well?

No, I think just now Chaithanya just explained that we had a guidance given a guidance that the gross debt will be between 1,000 to 1,200 and the net around 800. We already have kind of, got to that levels, but as he explained right now, going forward, the Vietnam crops are going to come in, and that's the time there could be newer contracts that could come our way, and therefore, the buying could increase.

We are not changing the guidance as of now. Maybe closer to the third when we are meeting again in the third quarter concall, we probably will be able to give you the exact number how the year-end will look like.

Sure. Sure.

Sorry, 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? Hi.

See,

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 kind of 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 that how things pan out.

Sure, sir. Thank you, and all the best.

Thank you, Abhishek.

Good morning, Praveen and entire team. Hope I'm audible?

Rahul. You're audible.

Yeah. Yeah.

A

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 for 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 fed? That is the first question on the capacity utilization.

Yeah.

Rahul, we are like, at an aggregate level, I don't want to Last time also, I've said that I will not break it down very deep. I'll give you a flavor.

At an at a at a overall consol level, our capacity utilization is closer to 70-odd percent with freeze-dried utilization, higher than 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 two to three years. Freeze-dried is something that we have to keep an eye on because maybe at best, we may have one more year of, maybe in a year or year and a half, we we could be very close to full utilization, which means that we'll have to see how do we augment the capacity.

We have been looking at, evaluating both that how how do we kind of increase the capacity at our end, also we have seen that is there any strategic partnership that we can do in the short run to make sure that the capacities are there to fuel the growth. That's on the, capacity side.

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.

Just wanted, as you had guided for 15% as a volume growth not just near-term, but medium-term also you want to maintain this trajectory. At what optimum capacity utilization you would have to go for a further capacity expansion?

Because generally, we have seen at 80%-85%, you are just at

a

CapEx plan? Correct.

Correct. That stays true.

At 80- 85, we need to kind of go in for expansion because while we talk about rated capacity, a lot depends on how much of changes you're having, what kind of blend that you're 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 two, three years.

We need not worry. For freeze-dried, we are keeping an 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.

Just adjacent question to this that before expanding the capacity, any debt levels you want to reduce it down so that it doesn't becomes a balance sheet heavy?

Just I'm

not asking from near-term six months perspective, but from a strategic direction perspective. No.

Rahul, I think, today last time as we said, we are in a very very comfortable position. If you remember last time when we were doing expansion, our top line used to be 1,000- ₹2,000 crores, and the bottom line was probably ₹200 crores PAT.

With the current position of the PAT itself which has doubled, and the cash flows are very robust. Just now Chaithanya told you that at ₹1,100 crores gross debt, our net debt is around ₹740 crores.

Which means that there is a ₹300-₹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?

We are in a very comfortable position right now. We're not kind of thinking too much or putting that, "Okay, at this level, I'll go for capacity expansion, or at that level, I'll go to capacity expansion."

We are good on that front, comfortable on that front. If at all capacity had to be expanded, I don't think so funding the CapEx will be of any issue at all at this point.

Fine.

I think Chaithanya just wanted to add a point. Sorry.

Yeah.

Please go ahead.

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 two years, we were witnessing in your commentary that the customers are preferring short contracts.

Are you witnessing some signs and any inquiry in pipeline which has been build up?

Quite a bit of long-term contracts are coming back. Rahul, as I was telling you that customers or the clients are a little on a wait and watch when these prices are rising, at the same breath, I was saying that prices rising stability of prices is more important than a higher level or a lower level.

What has happened is that even now the prices keep fluctuating. That is the reason sometimes the clients are a little still on a wait and watch that while the prices are fundamentally come down, the fluctuation still holds true.

In fact, last three months, I have been seeing that every day there is a fluctuation between $50 to $100 per day. One day, it goes up, one day, it comes down.

It keeps the clients still on their toes. Having said so, because the price table has come down, at a broader level, we are seeing a lot many more, medium and long-term contracts coming back.

Right. The last question from mine, any wallet share increase you're witnessing from your existing client and any new client addition that has taken place?

Or any client run rate you can write? Yeah.

Rahul, again, these are continuous process. There are instances where we have seen wallet share increases.

There are clients where we have increased volume wallet share, and again, there are new clients that have been added. We have been speaking about our initiatives in Far East, which two years ago when we were doing the concall, I had said that we are seeding the market and we're trying to kind of get new clients from that side because that has been not so strong geography for us, and 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.

Any client we have lost or any such?

There would have been. Yes, absolutely.

See, 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.

It's business is always, as I always say, that it's a leaking bucket. We just need to make sure that a good proportion of your clients stay intact, and your tap is bigger than your leak.

Sure, sure. Best wishes to you and your entire team.

Thank you.

Thank you.

Thank you for the opportunity. Sir, just one question.

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 ₹140-₹150 crores, but that has now gone to ₹190-₹200-odd crores. Is it that the freight or the insurance fees that we haven't been able to pass on on the export side, or is it that higher A&P spend for the domestic business?

Basically just trying to understand this other expenses, why it is appearing little on the higher side?

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.

We are also able to pass. Yes, of course, the once any CIF contract which you have done and the prices have increased, you have to take it up in your pocket.

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 onto the clients, your top line also goes up, and the expense comes down and sits here.

Optically, it looks like that it has gone up, but at a operational profit level, you will see that there is no impact of that.

Okay. Got it, sir.

Thank you.

10% [unclear].

Hi, Praveen sir. Thank you for the opportunity.

Just on the EBITDA again, sir, for the second quarter specifically, the EBITDA per kg, has it slipped below the ₹130 level slightly? Is that correct to assume?

Going forward-

No, not really. Yeah.

Sorry. Go on, Abhishek.

Yeah.

Okay. Is it between ₹130 to ₹135?

Is it the range that we should be looking at?

I think ₹135 to ₹140 we had said last time. That is where it stayed.

Yeah.

Even for the second quarter as well?

Yes.

Great. I was asking, sir, you spoke about the mix, the proportion in terms of FDC, small packs, etc.

Apart from the mix, any other factors that we should be watching out for when we think about the changes in EBITDA per kg?

No, not really, because, again, like I have been guiding for last three, four quarters that because the proportions or let's say the product mix are now in the basis, 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, and I don't see that changing either downwards or upwards.

It'll kind of follow the volume growth profile. There won't be any change there.

Got it, sir. Secondly, sir, on the just going onto the international branded business, sir, I think this is an area that we don't talk about much on our calls.

You have talked about Percol in the recent past. I think you indicated a revenue number of ₹26 to ₹27 crores where it is at right now.

Right.

You have talked about expansion in the Middle East as a near-term area of

Right.

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.

On the Percol, Percol continues to grow. Again, it's a very different geography, UK, wherein you have to keep doing the re-listing, re-contracts with the chains, but we have got some good responses from there.

As of now, we are looking at similar kind of a number between ₹25-₹30 crores that we will end this year at. Having said so, we had indicated that maybe one, two years, because we are investing behind the brands also, maybe ₹1 or ₹2 crores of loss at an annualized basis.

Hopefully, by next year, we should start seeing some profits also coming from that front. Now as far as expansion is concerned, yes, we have been kind of working with a lot of chains and distributors across many countries.

For example, now we probably have got, if you remember, along with Percol, we had brought some another three, four brands, and we had said that depending on the geography and depending our strategy, we'll use these brands. Percol was a certified coffee, but there were a couple of other brands like London Blend, Per Cup, that we had bought at that point of time.

One or two brands, very soon, we have finalized the deals with couple of chains in the US market for one or two of these brands. They will be launched very soon.

We have officially launched our brand in the Nepal market, and in fact, we are doing some marketing activity as well, sponsoring one of their cricket leagues, which is going live on 26th of October this year. Vietnam again, we are trying to build the branded business.

Hopefully, in a quarter or so, we will start seeding the market or 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.

Got it, sir. Apart from this ₹25 to ₹30 crores of Percol that you quantified, overall, what is your estimate of the-

These are all negligible. These are all just seeding happening.

Maybe a couple crore or ₹2 crores more of billing could come. That we'll see.

Not very worthwhile as of now, because these are all seeding activities that we are doing.

Currently, if I say that probably the international branded business would be maybe ₹30-₹35 crores, would that be a correct assumption?

Around ₹30 crores you can take that.

Got it, sir. That's all from me.

Thanks and all the best.

Thank you.

Hi, thanks for the opportunity, and congratulations to the entire team, I think it's fairly resilient performance in tough times. Sir, my question is on the branded business.

First half, we did I think ₹250- I'm

Sure, is it better now?

you may proceed. Thoda better hai, Akhil.

Thoda better. Haan.

Okay. Sir, branded business, we guided for ₹550-₹600-odd crore last quarter, right, for the full year '27.

Do we maintain that? Because the first half was ₹250-₹260-odd crore.

Haan,

we guided ₹550 ke aas paas, na?

₹550, yeah. ₹550-₹600.

Yeah. That will remain, because abhi thoda, I told that in India there is a bit of seasonality.

Correct.

The sales will increase in the third and fourth quarters. That guidance we are maintaining that.

Sure.

Sir, anything on the market share gains, like quick-commerce you had highlighted we are closer to double digits and I can see availability [fully?] on quick-commerce players, including Amazon.

Any update on the market share gains, further market share gains on the quick-commerce channel specifically?

Nothing significant, Akhil. Matlab the 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. 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.

Sure. That's all from my side.

Thank you so much and best of luck.

Thank you, Akhil.

Yeah. Thank you very much for the opportunity, sir.

Couple of questions. One is that when we're saying that FDC expansion will be coming maybe next 1 1/2 year down the line, is there anything we have thought is it a more than 10,000-plus ton or any thought over there?

Or when we're saying the third party we can manage, is it in Vietnam or any other country we are looking? Abhi

we have not decided, I can't give you a very definitive answer. It won't be 10,000 ton.

Generally, FD, if you would have noticed, we generally have added 6 6,000 tonnes every time we have expanded capacity. Most likely, if at all we were to add capacity, it'll be in that range of 6,000, right?

Now, whether it'll be in Vietnam or India, both places we can do expansion because at both places we can do brownfield expansion of another 6,000 tonnes. Let us see how things pan out.

We haven't taken a call. As and when we do it, we will keep you informed.

The second is that when if you look last almost a year, coffee price has been stabilized or coming down. Is it the only reason people are shifting from SDC to FDC, or some actual premiumization is going on in the coffee market?

No. Actually, that's not the reason.

It's 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's not just coffee, for any product, if the premium segment pricing comes down, there is a tendency for people to upgrade, right, and premiumization happens. This is happening across categories we are seeing that there is a trend of premiumization that is happening.

That is happening in coffee as well. We are seeing that trend, and this trend got a little accentuated when the coffee prices started coming down.

That was the correlation we were trying to kind of form. As of now, the momentum for FDC is still there, we are matlab looking forward that this momentum could continue, and accordingly, we'll have to take calls on how do we kind of supplement our capacity on that front.

Got it. Thank you very much, sir.

Thank you.

Thank you for the opportunity. Am I audible?

Bhavya, you're audible.

Yeah. Just one question.

I think previously you have mentioned that in terms of a capacity or in terms of supply globally, we are high single digit, right, about 9%-10% of capacity globally that we have. 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 in 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?

Bhavya, I think yes, it is too early because we still single digit, as you rightly pointed out, single digit in the market share in the B2B segment globally, right? There is enough and ample scope to grow, and we have been saying that we are seeing 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. 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 growths could kind of come down once we have attained maybe a 14%-15% market share globally in the B2B side, then hopefully these initiatives itself will become big enough to drive the growths 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.

Understood, sir. Thank you.

That was just my question. Thank you so much.

Yeah. Hi, sir.

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?

Generally, it will take 9 to 12 months to put the project.

Okay. Machines availability is not a issue in FDC?

That's not an issue. Machine's availability is not the issue.

Where we source?

We source from many this thing. As I've been telling you that when we put up a project, we don't take the full thing from just one supplier.

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.

Okay. Got it, sir.

Thanks.

Hi. Praveen sir, congratulations on great set of numbers.

Just a couple of things. On the capacity expansion side, if you can help us understand, for the FD capacity expansion for 6,000 ton or whatever number that we do, is there any meaningful difference on the CapEx cost compared to what we did earlier?

I don't think so. Maybe we can add some inflation cost to that, but it won't be very different from what we did.

Around maybe 500-odd crores we did last time, if I'm not wrong. It'll be around that range itself.

Got it.

Got it. Fair enough.

Second question is on the B2C side. We were doing a lot of this Malgudi brand related trials across the touch points.

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?

Two things I think, Dipak, we had spoken about. One was Malgudi snacks, and while we are still in the test market stage, but we have added couple of more products, we added one more product, which is banana chips to the portfolio, and we're adding couple of more by this quarter end as well.

The response has been pretty encouraging. We have seen decent amount of offtakes 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.

From there also, we are getting pretty decent response, and 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 onto some of these categories, and we are seeing good amount of offtakes as well.

Hopefully, these look to be good to expand from here on. We'll take a little more time to just make sure that everything is right in terms of one product and the offtakes happening, and then we will kind of expand.

I think the responses have been pretty good.

Got it. Got it.

Thanks. Thanks a lot, and all the best for the rest of the quarters, sir.

Thank you,

and to the team.

Thank you for the opportunity. Am I audible?

Deepak. You're audible.

Hi, sir. Sir, first of all, congratulation on once again delivering a double-digit sort of volume growth and continuing 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's say, at around 200 crore in absolute terms. Now, if I have to further break it down, all this incremental other expenses spike is coming from our stand-alone 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?

Two things, Deepak. I think one thing you mentioned, but let me start first with we anyways got 10% volume growth, right?

So, 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 with the domestic market.

That is also there. The third thing is that there has been a bit of increase in the freight and fuel costs that is also contributed to this.

If you add all of these three reasons, none of them very significant, but all of them three added, has you will see the increase. Also, 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's the as such thing. There is nothing I don't know whether I should say whether it will normalize or not normalize.

To me, it is actually normalized now itself now only. What I would say is that, as we are guiding that 15% volume growth, will give you that similar kind of a EBITDA growth also, because our EBITDA per kilo will more or less remain intact.

Got it. We are confident that we'll be able to maintain that ₹130 to ₹140 per kg.

Okay. Sir, 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%-90%, right?

I'm

pretty sure that CCL as a company, you would want to continue that double-digit growth rate beyond FY28 also. 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's say, by Q4 of this fiscal year, provided that we have an aspiration to grow at double digit beyond FY28 and the lead time of 12 months?

Absolutely. You are right.

Just a small caveat to this. Let's say, 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 at least in the FDC front, or we say that, okay, at least for the another year or so, we probably will supplement the capacity through some strategic tie-up till we are very confident for the next expansion. Both the things are possible.

You are absolutely right. We should be hearing something at least end of Q4 or starting Q1 next year.

Okay. Sir, when you talk about this strategic expansion, I presume that it would be more like in contract manufacturing arrangement rather than a JV route where you will be contributing equity?

Means I just wanted to understand that. It

could be both. I can't say what route we'll go, because now 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.

Got it. Got it.

Our aspiration stays intact that we want to grow our volume at double digit even beyond FY28? Absolutely.

Absolutely. That is the aspiration, and we want to make sure that we fulfill 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'll

keep our options open is what I'm trying to say.

Okay. Sir, when we talk about strategic partnership, would it be fair to assume that, because it's a strategic partnership, there our margins could be little lower than what we are doing on our own standalone basis?

Could be. Could be, but again for, 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 24/7.

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.

Sure, sure, sir. Very helpful, sir.

All the best for the future. Thank you.

Thank you.

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?

We are evaluating. We're not saying that definitely we want to do an acquisition.

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'll definitely evaluate and be happy to do that.

Is the priority more towards something that is non-coffee, like 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?

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 kind of 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.

Can we expect something in the current financial year itself, or is there a while for it, according to you? If you could give a broader idea?

I told you. I don't think so, I'll be able to answer that, because you never know what comes your way.

Acquisitions are a matter of huge amount of, not just strategic intent, but also requires a lot of due diligence and other aspects as well. It will be difficult for me to comment whether something is coming this year or next year.

Got it, sir. Thank you, and congrats for another set of good numbers.

Thank you.

Yes, sir. Just one question on the gross margins for this quarter.

I don't know whether I missed a point on that, but when I calculate it for this quarter, it comes to 62% and it's down by about 200 basis points or 300 basis points YoY or QoQ. In a declining coffee price or a stable coffee price environment, why should this happen is my question, because you stated EBITDA on the ₹135 to ₹140 per kg remains intact, right?

Where am I missing a point?

You're not missing a point. Very simply, don't 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 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. 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, what's a 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. 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'll be 15% volume and a similar EBITDA growth will happen, and that we are fully on track.

Okay. Sir, is there anything to judge on the near future of the coffee prices?

Because historically, it's always been a guess, which may sometimes come right, sometimes it comes 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 on purely on the production and fundamentals of the availability or supply-demand basically.

The exact picture we will know in December, because as I was telling you a while earlier that there has been a mixed report. There have been, of course, there have been reports of El Niño, and that is 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's on the bad news side part of it.

The good news is that there's also reports that the crop till now has been holding up reasonably good. There is looks like there will be a good harvest.

The good point is that, even pre-harvest, even at a speculative levels, the prices haven't shot up to alarming levels. At least on a personal level, and that's my personal view, that 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'll have to wait and watch for December to see exact trends how they are emerging.

Okay. Whatever you are collecting from-

Hi, Praveen. Hope I am audible?

Manish. You're audible.

Yeah. Just only one book-keeping question.

In the other expenditure, I think couple of questions came, right? Just wanted to know, what is the forex gain last year in the second quarter and this year second quarter?

Why I'm asking

is because- We are not going to the

Haan. Nahi, why I'm asking, because cash flow, if I look at your cash flow, right?

Generally, first half of the last year, in a cash flow, your forex gain was around 40-odd crores, 39-odd crores. This year, around 11 crores was the number, right?

If that is a thing that is the same impact on the P&L, I think so that could lead to some drop in your EBITDA per kg and the other expenditure increase.

If you can highlight on that part. Yes, you are right.

You have spelled out the number, I need not highlight anymore on that. You are right.

Of course, because last year there was a little higher depreciation than what it has happened this year for rupee. That little advantage was there in the last year built into the basis.

If you remember, Manish, we had said that even beyond those advantages, what we have guided that we still will grow at 15%, and that is what we 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 mota-moti at 15% is what we are guiding.

You're

right. Your observations are right.

Sure, sure, I agree.

Okay. 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 ₹130, ₹140 per kg of a EBITDA,

right?

Just wanted to know, once we reach towards the 77,000 metric ton of a capacity full utilization, what could be the EBITDA per ton or per kg you expect?

Manish, at the cost of repeating, I don't see significant change from here, because see if you see at our FD utilization is better, which means that already in the base the proportion of FD is higher. Maybe the product mix advantage may not be there.

At the same time, a betterment in terms of small-pack volumes, betterment in terms of better specialty coffee, the domestic incremental volumes are coming at a much better clip now. All of that will help us better it, but again product mix I don't see much of an advantage coming from that front, and therefore, I don't see much of a change in EBITDA per kilo going forward from here.

Understood. That's clear.

All the best. Yeah.

Thanks. Thank you.

Thank you.

Am I audible?

You're audible. 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've been seeing with FDC has only been accelerating. In an environment, let's just say, where we are seeing interest rates also inch up slowly, and the Vietnam crop is still a uncertainty when it comes to the next one year or so.

In an environment where we'll have to make a very conscious decision about allocating capital towards working capital or debt reduction or the potential M&A if we 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? How long will we be okay with that versus we want to bring it back inside and manufacture on our own?

That's

the question.

Yeah. Again, 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.

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'll be very very opportunistic in nature.

The only reason why we do that is that 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. Now, capital allocation, yes, you're right.

There we require capital allocation for, let's say, if the coffee prices were to increase, to make sure that working capital is intact. At the same time, if you were to put it on the CapEx, then that also throws up a challenge.

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, 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. Got it, sir.

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.