Ladies and gentlemen, good day and welcome to the CCL Products (India) Limited Q1 FY 2026 earnings conference call hosted by Antique Stock Broking Limited. 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 the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Manish Mahawar. Thank you, and over to you, sir.
Thank you, Anushka. Good afternoon, everyone. I am pleased to host today's earnings call of CCL Products . We have an integrated team represented by Mr. Challa Srishant, Managing Director, Mr. Praveen Jaipuriar, CEO, Mr. Chaithanya Agasthyaraju, CFO, and Ms. Sridevi Dasari, Company Secretary, on the call. Without any delay, I would like to hand over the call to Mr. Jaipuriar for opening remarks, post which we will open the floor for Q&A. Thank you. Over to you, Praveen.
Thank you, Manish, and thank you, team Antique, for arranging the call. Good afternoon, everyone. I welcome you all to this first conference call of 2025-2026. Let me just give a brief overview of the company's performance for the first quarter. The group has achieved a turnover of INR 1,058 crore for the first quarter, as compared to INR 774.6 crore for the corresponding quarter of the previous year, achieving a growth of 37%. This incidentally is the first time we achieved a turnover of INR 1,000 crore in a quarter. The EBITDA stands at INR 161.43 crore as against INR 131.62 crore, which is a growth of 23%. While PBT is INR 131.62 crore, growing at 8%, and the net profit stands at INR 72.45 crore, with a growth of 1%. The PBT, in fact, got impacted due to higher interest and depreciation components.
The logistics market, where we sell our branded products, continues with its growth momentum, and we clocked approximately INR 150 crore in the first quarter itself. Out of this INR 150 crore, almost INR 100 crore was from brand and the retail business. Because of this aggressive growth, there is a continuous market share gain across channels and across geographies. As far as the green coffee prices are concerned, they have softened 20% or so, or 20% to 30% in the last two, three months. However, there is still a lot of volatility in the market. Every day we see a lot of ups and downs that are happening, which is making the buyers, you know, still, the buyers are very tentative.
The period between the Brazil crop, which is ending now, the harvesting of Brazil crop, and the harvesting of, starting of the harvesting of Vietnam crop, which happens in December time, I think this is a period of wait and watch for all of us because if prices were to remain stable during this period, then it augurs well in terms of the price softening and stabilizing post the Vietnam crop. That's a little brief from our side. I open the house for questions now.
Hello, sir. Can we start with the Q&A?
Yeah, yeah, please. I said we can open the house for questions. Thank you.
All right, sir. All right. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Akash from CC Products. Please proceed.
Hello.
Hello. Yeah, Akash.
Hi, sir. Are you now audible?
Yeah, yeah, you're audible.
Yeah, sir. Good morning and, you know, very congratulations on good volume numbers. I just had a few questions regarding the volatility in margins because I know the correct way to gauge your company's EBITDA number, as you have previously mentioned. The huge variations in quarterly margins, what do you think is a stable number to look at? I understand with coffee prices decreasing, your EBITDA will be the same, and therefore margins will increase if the coffee prices stay the same. What is the good way to see your margins, sir? There is a huge volatility quarter on quarter.
Yeah, absolutely, Akash. You're right. This volatility is simply because our selling price is related. We operate on a cost-plus model, so our selling price is related to coffee prices. If the coffee prices fluctuate, EBITDA as a percentage to top line becomes very confusing. The right way, and that is what we have guided, is that the right way is to look at your EBITDA growth numbers. In most of the last two, three years, we have always guided that our EBITDA will grow in line with our volumes. We have given a guidance of 15% to 20% volume growth and EBITDA growth year on year, and that is what we have been maintaining. If you see our EBITDA growth at a consolidated level, it is at 23%, which is what one should look at, that is, this growth momentum being continued or not.
That is how we internally also look at that. Are we maintaining this momentum or not? There are a lot of other factors apart from the coffee prices also that determine this percentage to EBITDA percentage to top line. Things like what is your product mix, what kind of clients you are serving, what kind of pack sizes you are serving. These are all determined, and there could be quarterly fluctuations in terms of what kind of product mix was there, what kind of client mix was there, what kind of pack size mix was there. Therefore, keeping all of this in mind, we have always guided that you should look at the growth figures when it comes to EBITDA. Our guidance has always been 15% to 20%, and that is what we have been maintaining for the last three, four years.
That's our aim to kind of, at least for the next three to four years, that will be our aim to maintain that kind of a growth momentum.
Okay, sir. Just a follow-up, sir. With Brazil having 50% tariffs, and most probably the coffee prices will be passed on with the 50% tariffs, is there any chances of those coffees getting rerouted to countries like Vietnam and India for processing, and therefore we stand at advantage for that? Is this a possibility?
There is definitely a possibility because of 50% tariffs, they would want to sell the coffee to other regions as well. The good thing about us is that both at India and Vietnam, we are placed in such a manner that we can buy coffee from across the world. That gives us a lot of flexibility, which is not necessarily there with a lot of producers across the globe. Whether Brazil coffee gets sold in Vietnam at a good price or Vietnam coffee comes down, because of our flexibility, we are always in an advantageous position. Either way, we are not speculating or wanting to kind of double guess the market that what will happen. We are taking as things come along because, you know, anyways, we are in a good advantageous position.
Yes, sir. Okay. Great, sir. Thank you.
Thank you. Before we proceed with the next question, ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. The next question is from the line of Abneesh Roy from Nuvama. Please proceed.
Yeah, thanks. My first question is on the India coffee costing. Based on the current tariff structure, and these can change, we all know that. If we assume that this is the current India tariff structure and this is the current Brazil tariff structure, and then taking the international price of coffee, my sense is international coffee has corrected 30% from the peak, if you could confirm that. Based on the two crops which we have, Robusta and Arabica, what will be your sense, if we ignore the tariff-related noise and based on the supply demand, what will be your expectation? You expect more coffee correction in India, in terms of the India prices?
Abneesh, yeah, you're right. There's a lot of flux in the market, and that has actually kept all of us guessing. First and foremost is tariff. Tariff also, we all know while the statements come at a very broad level that there are 20% tariff or 25% tariff or let's say 50% for Brazil. You know, the finer prints have to be read because there are a lot of segments which they are also choosing to kind of let go. That is keeping all of us guessing what is going to happen. Leave alone that fact, because at both India and at Vietnam levels, the tariff structures as of now comparatively are at an advantageous position because Vietnam is at 20% and India at 25%. We don't see any disadvantage on that front as of now.
Now coming to your second part of the question that, you know, with 30% lowering of coffee prices, see, anyways, we work on a cost-plus model. Any lowering of prices or any table lowering is, while it is good news on the front that our holding costs become lower and therefore our requirement for working capital becomes lower, it does not affect our margin profile. In terms of growth prospects, one has to see because we have discussed this many number of times that any growing price hikes and declining prices actually are not good news. The good news is when the prices are stable. That's when the client gets committed towards longer contracts, toward more volumes. That is the situation.
Today, what has happened is that while the prices have corrected 30%, if you see every day, there is almost a $100 fluctuation up and down, up and down that is happening. Everybody is in a little guess mode that people are trying to double guess what's going to happen in terms of prices going forward. People are a little non-committal at this point of time. That's the reason we said that this interim period between Brazil crop ending and Vietnam crop starting will be a key period for all of us to watch because if the prices hold on to these levels for the next three, four months, and then the Vietnam crop arrives, then I think it will be good news for all the buyers as well as manufacturers because prices would have stabilized. That, in turn, kind of augurs well for all of us.
I understood the cost-plus model. I wanted one follow-up here. In terms of the supply side, say the crop quantity, etc., in Brazil, is it a good increase versus last year and versus the demand side? Is it good? Vietnam crop, you said three, four months. I think it will be a bit early to really guess there how the supply side is. If you could comment on this, that would be great.
Yeah. Actually, yes, Brazil crop, there was a good flow of Brazil crop this year. That was a trigger point for the prices to start softening. The good part was when the prices softened, not only by 30%, but for a good now two, three months, the trend has been on the softening side. That's a good indicator as of now. Yes, Brazil crop, we had a good flow this year. More than that, Abneesh, if you were to match the supply and the demand trend for the last 25, 30 years, you will see that the difference from time is not more than 4%- 5%, but the speculation and the market spiral kind of make the coffee prices go up by 40%, 50%.
What happens is that coffee, because of the fact that it's the second most traded commodity after oil, there's a lot of interest and therefore leads to a lot of speculation as well. To answer your first question, has the supply been good? Yes, the supply from Brazil was good this year.
Sir, my second and last question is on the two line items. Depreciation 45% YoY increase, 24% quarter-on-quarter increase. Does the number stabilize at this INR 34 crore number? The lower coffee costing, you did say the working capital needs will reduce. Interest cost at INR 34 crores, that should hopefully reduce if we assume this 30% lower costing will continue.
Both the answers are yes, Abneesh. First one is about that, you know, these are peak levels of depreciation. Yes, because after the first quarter of last year, we commissioned both our India unit and Vietnam unit in the last quarter. Now the full depreciation is coming to the books, and therefore, these are the peak levels. Secondly, interest cost, yes, again, these are peak levels. Considering two, three things that, one, because of the cash flows, we will be able to, over a period of time, start retiring the debt. Our working capital requirement, if the coffee prices remain at the levels that they are, will also come down. All of these, so improved cash flow, working capital coming down would mean that the interest outflow will be lower.
Yes, there is a lag effect that happens because we do hold, you know, two months of, because of our order book, two months of inventories, which will be at higher prices. With that lag, I think from next quarter end onwards, we can start seeing some, you know, a relief on that front as well.
Could you confirm gross debt, net debt, and cash levels?
I'll just ask Chaithanya to give you this answer.
The debt that we spent at INR 1,671 crore, it was INR 1,812 crore as of 31st March, and INR 1,974 crore as of December 2024. From INR 1,934 crore in December 2021, we brought it down to INR 1,018 crore, and now it is INR 1,671 crore.
This is gross, right? Or net?
Yeah, net debt.
Net debt. Okay. That's all from my side. Thank you.
Thanks.
Thank you. The next question is from the line of Abhishek Navalgund from Centrum Broking. Please proceed.
Hi. Thanks for the opportunity. Congrats on a good operating performance, sir. The first question is on, basically, India and Vietnam FDC capacities, which we have started like one, one and a half years back. Possible to share broadly the utilization levels at both these capacities?
Abhishek, because of the fact that a lot of new capacities have come in a staggered manner, it's very difficult to break everything down. Largely, if I were to kind of, we have doubled the capacity. One way to look at it is that our existing capacity, which was there, is running at full, full capacity level, and the new capacity, we have started utilizing around 10%- 15% of that capacity. At an aggregate level, you could say 60% of the utilization is there. That is where we are on the capacity utilization.
You spoke about the B2C part also. Is it possible to also give some color on the Percol outlook in the UK, maybe from this year or next year's perspective?
Percol, Abhishek, has, you know, we've kind of at least turned the downward spiral that Percol was in. This year, we are looking to double the value from last year. Last year, because we were kind of ending the takeover formalities, we were doing around, you know, just to give you a brief idea on the top line, around INR 15-INR 16 crore. We are looking to double that this year. That's what's happening in the UK. We are going for a lot of relisting. The challenge in the UK is that you only get, you know, there are designated times for listing in UK stores. We have to wait for that full cycle to get over for new listings and all that. We are getting very aggressive on Amazon.
The good part is we've started to build the brand by spending, you know, on social media and outdoor, to make sure that we build the brand on a sustainable basis. That's the brief on the UK Percol front. India, we just launched, you know, a couple of months back. You've just seen a lot of activity, especially in the, you know, in the print media and all. We are again looking to build this brand as a premium offering in the Indian market, trying to capture the niche premium segment in the Indian market. Too early to give any numbers or any, this thing, directions. Things are moving good. We are now selling on almost all the platforms. We are very particular about putting it in very, very niche, you know, modern retail outlets. All that work is, as we speak, going along.
We'll wait for a couple of quarters for us to kind of get a firm hold on the kind of feedback that we are getting from this launch in India.
Again, coming back to the B2B, is it possible to say what percentage of our orders are, let's say, on a spot basis? The reason I'm asking this is, basically, we wanted to understand in a gradually declining pricing scenario, is it possible to quantify any inventory loss during the quarter, if any, or there is no such thing for the spot orders?
There's not much of a change, Abhishek, because while the prices are falling, I mentioned that in both rising and falling markets, there is a sense of tentativeness. We'll look to see how stabilization happens. As I told earlier also, we have full visibility of the quarter, almost near to 50%- 60% of the visibility for the subsequent quarters. That stays. Our long-term clients stay, they stay with us. The only thing is that instead of giving me a 12-month contract, they'll give me a three-month contract or a four-month contract. That is how it is still panning out. There's not much of a difference. We have a feeling that going forward and as we close into the Vietnam stock cycle, we will start seeing a lot more long-term contracts coming in.
Sure. My last question is on tax rates. Possible to share the?
I would request you to join back the queue. Thank you so much. The next question is from the line of Shirish Pardeshi from Motilal Oswal. Please proceed.
Hi, Praveen, Chaithanya. Good afternoon. Thanks for the opportunity. Just two quick questions, Praveen. The prices have come down very severely. Just more curious, what is the high-cost inventory we are holding at this point of time, in terms of number of days or in terms of sales?
Whatever inventory we hold is what we have sold already. There is no inventory which is loose inventory with us. We don't buy inventory at all. Generally, because our three to four months of definitive contracts are there, the volumes are sold. At any point of time, we would hold two to three months of stocks with us, but all of this is sold stocks. We're not holding any inventory. Prices going up and coming down doesn't bother us. What bothers us is that there shouldn't be much of a fluctuation around inventory.
You mean to say that the price drop for the inventory can be immediately passed on because we have a cost-plus business model?
Yeah, we have a cost-plus business model, and we buy after we have sold. Price drop can be passed on to the customer. Today, we will do a contract at today's price.
Okay. My second question is on the outlook. You mentioned that Brazil is already dropping, and Vietnam is also looking good. In that context, if I go back exactly 90 days before, the customers were having the order, but they were not giving it the visibility. Is there any behavioral change which has happened, sentiment change has happened, people are now giving you maybe 90 days inventory visibility?
As I was telling Shirish that our long-term clients, they give us a visibility. The only thing is that we only advise them not to go for a very long-term contract in terms of volatile market situations. We know we have a visibility. There are two things. One is having a visibility, and that is the reason we have expanded our capacity. We have given aggressive guidance. Otherwise, we wouldn't have given this aggressive guidance if we didn't have visibility. The only thing is that if you ask me that do I have a confirmed contract in my hands for the next 12 months, probably not. That is when we say that, okay, for the next three to six months, I know that the contracts are there in that time. In terms of visibility, yes, there is a behavioral shift now.
People are breathing a sigh of relief because a lot of these, the price, there has been an incessant price increase for the consumers also in the market across the globe. In the last two years, there has almost been a price increase of 40% or so, which is very steep in any consumer goods category. What it does is that it probably puts a stress on the consumption pattern. Now, brand owners and suppliers and retailers, they are obviously breathing a sigh of relief because at least they'll be able to kind of either reduce prices or hold on to the prices. This will mean that there will be a consumption drive that would again come back to this category. I think on that front, it is there.
Yes, it will translate to order as we go along because obviously everybody wants to make sure that things are settled now going forward.
That's exactly my point, which I was trying to understand. With this visibility, the volume we have reported this quarter, does that give the confidence that we will be able to maintain or surpass the volume in the second quarter?
Absolutely, it gives the confidence. That's the reason, you know, Shirish is even when the prices were going at a buzz of pace, our confidence on volume growth was always intact because, you know, ultimately, there are two things that are not, in fact, not two things. There is only one thing that we are concerned about. The consumption should stay intact. As long as people are drinking coffee, we are in the business. Because of the competitive edge that we bring to the market, that's the reason we have, even when the prices were at $5,000 levels, we were confident and we had given a guidance that we will grow as yes, we had kind of broadened the guidance from a very sharp 15%- 20% to 10%- 20%. That was about it. We were always committed to that kind of a growth.
That's what we have delivered in the, in the, you know, worst of times when the coffee prices are at such high levels.
Wonderful. That's really helpful, Praveen, and all the best to you.
Thank you. Thank you, Shirish.
Thank you. We take the next question from the line of Bhavya Sonawala from Samaasa Capital. Please proceed.
Hi, sir. Thank you for the opportunity. Am I audible?
Yeah, Bhavya, you're audible.
Yeah. Just two questions. First question, just how the working capital growth being in line with the EBITDA growth that we always kind of fight with?
Sorry, Bhavya, I think your voice got very feeble after the first line.
Yeah, just want to know has volume growth been in line with EBITDA growth that, you know, we usually always?
Yeah, it is not exactly in line, probably a little lower than the EBITDA growth, but yeah, almost the same pattern continues for us.
Okay. I just wanted to also understand our investment going ahead in the branded business, which we are already in coffee and plus now we have started snacks, which I understand is going to be a pilot. In the next two, three years, in terms of advertising and any other foreign investments, can you just throw some light on how that is going to pan out?
Bhavya, I think what investments we are doing is largely to build the brand. We are not doing any investment in terms of CapEx as far as B2C is concerned. Even if we are getting into a new category like snacks, we are going for third-party manufacturing. All the investment is on the brand. What we have now, since the brand business itself is profitable, what we are doing is, instead of meeting the brand, we are trying to kind of plow in the profits going forward. That's the reason we have been experiencing such aggressive growth. We are looking to maintain this momentum by maintaining the spends that we have been doing. In fact, as the brand is growing, we are increasing the spends as well. That is something that we'll continue to do because not only do we have coffee itself, we are very small right now.
There is a large scope to grow. Also, now we are kind of spending to build on some of the other categories right now at very test market levels. I'm sure soon we'll start investing there also in terms of brand building. Nothing on the CapEx side.
Understood. Just a last question. By the year-end, do you see the branded business around INR 400-INR 500 crore? Is that something that is on the paper?
I think you have given as broad guidance as we have been giving, 400 to 500. Definitely, first quarter itself, we have done 400. Definitely, we are going to touch 400 now. How far we go beyond 400 is the question that we all have. We are putting all the measures and all that, all our might to make sure that we go as far as possible.
Thank you so much. That's all from my side. Thank you.
Thank you.
Thank you. We take the next question from the line of Richa from Equitym aster. Please proceed.
Thank you for the opportunity, sir. Sir, I just want more insights on with these different tariffs that are being imposed.
Yeah, could you please?
Okay. I just wanted to understand that with this tariff, what is the sourcing pattern in the U.S.? How much of, you know, what is the Brazil share versus India share? Are you witnessing increased inquiries from the U.S. customers with this tariff talk?
Richa, yes, actually, there has been an increase in inquiries. With this tariff also, there is a lot of layers into this tariff, and every day, everybody is discovering newer things. While Brazil has had 50% of tariff, we still are trying to figure out what is the tariff, because when Trump announced his tariff, he just gives a statement, broad statement that 50%, 25%, 20%. In between the lines, there are categories which are getting exempted. For example, U.S. said that all the agri products which they don't grow will be zero tariffs. There are news like these also. We have to let the dust settle down. Yes, there has been an increased inquiry, but has it quickly translated into sale? As of now, I can't say for sure.
We are dealing with those inquiries as far as possible because, while Brazil has got 50%, Mexico has got a leeway for another 90 days. There are these kind of, let's say, fluidity in terms of the tariff thing. The whole world is under confusion, and it will take a little bit of time for us to understand where things are going. Yes, we are getting more inquiries, and we are addressing them as far as possible.
Okay. My second question is on the tax rate. I see some sharp variations. If you could just guide us, you know, where the tax rate could land over the next year.
I don't think so there is a variation. We are at full tax rate in India. Whatever the profit that's deployed in the standalone, that profit, whatever tax was applicable, that is there. Otherwise, it remains pretty much similar if you were to see. This tax is under MAT credit. A portion of it kind of just gets into the book, but otherwise, in terms of cash flow, it improved the cash flow. It is actually good in terms of cash flow. Yes, on the books in the P&L, it does show as that.
Okay. Okay. Sir, I just wanted to understand if I may ask one more question. What would be the margin difference between FDC and SDC?
I mean, not to bear here, Richa, the margin difference on a base-to-base, hung rule level could be anywhere between 30%- 40% between an SDC and FDC. It really depends on, you know, what kind of, sometimes even SDC, very high-quality SDC is also equally, you know, margin. You get high, high margins there also. It depends on blend, the type of rack, you know, the type of customer. Lots of layers into it. As a rule, what could say that FDC would be 30% more than SDC.
Okay. Thank you. I'll come back in the queue.
Thank you. The next question is from the line of Deepak from Sundaram Mutual Fund. Please proceed.
Thanks for the opportunity. Am I audible, sir?
Yeah, yeah, Deepak, you're audible.
Sir, could you please highlight what was our YoY volume growth for Q1 quarter?
It was almost double digits. That's a little lower than the EBITDA growth because we got better margins this time as well, like it happened in the last quarter as well. That is how we should look at it, a double-digit volume growth leading to around 23% EBITDA growth.
Okay, sir. Double digits meaning, let's say, between 11% to 12% or 12% to 14% means?
That is very difficult for me. I'll tell you what. This is something that we don't, you know, we give a little broader guidance on this because this is also sensitive information, which kind of leads to a lot of approaching and a lot of understanding about us by the competitors. We stay a little broad on this in terms of our explanation. As I told you, volume growth and EBITDA growth generally go in line. For last quarter also and this quarter, we have seen much higher EBITDA growth than the volume. If the EBITDA growth is at 23%, we are saying that we have a double-digit volume growth. Yeah. Double digit means somewhere lying in between. I don't want to push it towards the higher mark. We could kind of take the mean, median, mode of 10%- 20%.
Okay. In this domestic business, which we clocked around INR 150 crore, are we EBITDA positive in that business, or are we still to break even at EBITDA level as well?
No, no. Last to last year itself, we broke even. Last year, we were positive. This year also, we will be, in fact, more positive. We are not kind of, you know, keeping, we are clawing back as much as possible, whatever the brand requirement is, whatever it requires to build the brand, whatever it requires to be aggressive as we have seen, because there's a lot of aggression in terms of, you know, the branded business. We are growing very handsomely. We are clawing back a lot of money. It is, yes, even after clawing back, we are year by year increasing our EBITDA margins on the branded business.
Okay. Is it in, sir, higher single digits, or is it, let's say, below 5%?
No, no, no. It's this year, last year was around 4%- 5%. Before that, I told you we broke even. This year will be again between 5%- 10%. The good thing is that since last year, the interesting thing is that the additional volume that is coming is coming at a very, because all the break evens, the negatives are already built in the base. Which means that if we are adding, let's say, INR 100 crore to the branded business, that INR 100 crore is coming at a much higher EBITDA margin. In fact, almost as much as equal to the company EBITDA margin. Now the incremental business is no more margin diluting. It is kind of adding to the margin.
Okay. Even that shouldn't be helping this 22% EBITDA growth.
Absolutely. Absolutely. All of it. There are a lot of things that have helped us, and that being one of them.
Okay. Okay. Sir, last question, in the past on-call, you have highlighted that you wanted to expand in some U.S. markets for premium coffee and then again Southeast Asia market. Can you just elaborate what is your broad strategy around it? Has something changed in the last six months given the volatility of coffee prices, or our strategy remains the same more or less, and we are focused on premium at the Western world and let's say more economic coffee at the Southeast Asian countries?
Yeah, more or less our strategy remains the same. It's very simple. There are two sets of consumers we are wanting to target. One is the Indian diaspora because now our brand awareness in India has become pretty high, which means that the Indian diaspora now knows our brand. With the current brand itself, our own brands, Continental, we are wanting to serve the Indian diaspora. Wherever we have got a reasonable amount of Indian diaspora, we would be wanting to launch our brands there. For the Western diaspora or the local diaspora, we are using brands like Percol and Rocket Fuel, which we acquired last year, to serve the premium or a blend which is more attuned towards the local diaspora. That is our strategy. We are working on that.
As and when, because even in the UK, now that the brand is gaining momentum, there is brand work happening, brand building happening. A lot of European markets, we will look to kind of seed the brand because once it is known in the UK, awareness is there, then other countries also start showing signs of demand. That is the strategy for Western diaspora, Percol and Rocket Fuel, and for Indian diaspora, our current brand. That strategy remains the same. The Southeast Asian market is actually not a low-cost coffee market. It is actually more of a premix market. That is the strategy we are looking to kind of enter the market, that product strategy of how can we enter through premix. All that work is happening at the back end. As and when we are ready for launch or some news is there, we'll share it with you.
Okay. Thank you for answering your questions, sir. All the best.
Thank you.
Thank you. The next question is from the line of Anand S. from Avendus Spark. Please proceed.
Thank you, Sundar from Avendus. Sir, a couple of questions. If you were to look about a couple of years ago, we had this phenomenon when Robusta prices did decline. We had a huge variation between Arabica, and our volumes had a significant uptrend. Now, is that something that we can expect with, or not, keeping in mind that there has been high production numbers factored in, especially for Vietnam Robusta going over in the near to medium term and volumes resuming back to about a 20% number?
Basically, what happens is that for a short period of time, even two years ago when the Robusta did not come down, had come very close to Arabica, these are short-term phenomena because over a period of time, the table corrects itself because Arabica is used a lot for fresh coffee, and a lot of fresh coffee is being used in the more developed economies. What happens is that if the price, if Arabica and Robusta become close to each other or go very far from each other over a period of time, the table corrects and they have that kind of a difference, which is a 30% difference that autocorrects and comes to that level. That is there. Currently, also that difference continues to be there. While Vietnam is a lot more about Robusta, when the Vietnam crops come, that's a correction time for Robusta.
Brazil is also growing Robusta, so they also have a good flow of both Arabica and Robusta. We don't see much of a closure, closing of the gaps or the gaps widening beyond the justifiable limit. The gaps are there. The rightful gaps are there in the market.
Just a follow-up in terms of Robusta prices. With Robusta prices already down about 30% in the last month and anticipated to further go down with the Vietnam Robusta production expected to be as is, what it was there in FY 2022, what kind of debt levels can get reduced from our books on price corrections?
The debt levels will reduce on two, three fronts. One is, of course, the cash flow. Now we are done with our CapEx. There's no new CapEx there. All the cash flow that we will generate will be used to retire the debt. That is one. Second is that with 30%, if the 30% price reduction stays on track, the working capital requirement over a period of time will come down by 30%, like when we speak about it. That should be there. We will see this happening towards the end of next quarter. That is, again, with a quote that the prices stay where they are. We will start seeing these kinds of reductions. Hopefully, by the end of the year, I cannot pinpoint a percentage, but there will be a reasonable drop in our debt level.
Thank you and all the best.
Thank you.
Thank you. We take the next question from the line of Vignesh Iyer from Sequent Investments. Please proceed.
Thank you for the opportunity. My first question is, due to the tariffs that have been imposed on Brazil of 50%, there's a lot of reports coming up saying that the traditional deals might make way towards China and the EU. Considering, I remember from our earlier calls that we have said that we target China and the Middle East as a market that we see potential growth. How does this new set of competition that we foresee due to this tariff situation?
Fundamentally speaking, yes, these news are there. Brazil green coffee coming to China and other places, we also have our setup at Vietnam. In fact, last time, if you remember, we had also told that last year because the Brazil coffee prices went below Vietnam prices, we also bought a lot of Brazil coffee. When these news comes, these are largely about green coffee still. In terms of instant coffee, I don't see Brazil advantage over us if they want to sell in China, right? Because from Vietnam also, there is no duty to China, and our logistics will be much faster there than the Brazilian products. I don't see Brazil having an advantage in Asia because they want to supply more to Asia because of the U.S. tariffs. If this tariff was to continue for Brazil, I think it will give us an advantage in the U.S.
It's good news for us because we will not lose any advantage in the non-strong Brazil market, but we will get an advantage in the Brazil strong market like the U.S. Let us see. As I told you, in one of my answers to the previous question, we'll need to see how the dust settles because while these are, again, we are quoting broad numbers of tariffs, 50%, 25%, 20%, we also know even if India is at 25%, some of the iPhone components and iPhones and pharmaceuticals, they have either been kind of given leeway for that, or they are thinking to reduce tariffs to 0% on those product categories. Let's see how things settle down. Maybe for coffee, because they don't grow coffee, U.S., they may also want to kind of give a leeway on coffee imports as well. We will wait and watch on this front.
As of now, things are pretty fluid and double guessing is not going to help anyone of us.
Right, sir. On your second question, on that interest part of, you know, this quarter, the last two quarters now, we've seen around INR 34 crore of outflow when it comes to interest. With prices coming down, you know, can we more or less say that this could be the peak interest cost and some form, type of short-term debt, you know, will be reduced due to lower working capital requirement?
Yeah, yeah, 100%. These are peak levels. When we go beyond this, going forward, this will only come down. As I was telling you, because of the lag effect, it may take a little time, but definitely the interest cost will be on a downward prediction.
Okay. So.
Chairman, I want to add something.
Chief Executive Work Permit has had an effect. We have a debt reduction plan in place now, so the cost will come down over a period of time. As sponsored by Praveen Jaipuriar, there will be a lag. In terms of reflection in interest cost, interest cost will obviously come down, but with a lag.
Right. Got it. Got it. Yeah, that's something I think I will always follow your ads.
Thank you. Thank you so much.
Thank you. The next question is from the line of Gopinadha Reddy from PNR. Please proceed.
Yes. Thank you. Sir, coming to Continental brand that we are seeing in India as retail when it comes to instant coffee, small packets. Last time, we said that to maintain the prices, are approved.
Gopinadha, we are actually not able to hear you. Your voice is breaking. Could you please fix that?
Okay, I'll repeat it. When it comes to Continental brands in India in retail, sir, when it comes to small packets, due to the coffee price increase, we said that we are changing the mixing of roast, mixing of chicory and roasting, and that has changed the taste, obviously. Is it not going to impact our brand image when it comes to a particular brand? The customer expects a particular brand to have a particular taste, right? How are we looking into it?
There are two things that we do. Internally, we make sure that the taste doesn't change, right? We do very strong consumer tests. Only then we release any blend or any blend change. This is done with utmost care. The final taste doesn't change. That is something that we take care of because with the brands, we don't want to, as you rightly said, the taste change should not be there. We don't take any blend change without doing any consumer tests. A very strong consumer test happens, very detailed consumer test. Only then, when we get a final pick on that, only then we proceed.
Okay, I got the feedback from customers, so I just said whatever I got now.
I'll be happy to, if you could share the feedback on our website or on the mail, I'll be happy to engage and then take it up with our R&D. That is something that we make sure that we don't tamper with the taste at all. Sure. We'll be happy to take this feedback.
Sure. Thanks. Thank you. That is from my side.
Thank you. The next question is from the line of Vaishnavi Gurung from Craving Alpha Wealth Fund. Please proceed.
Thank you for taking my questions, sir. I just had three quick questions. One was on the revenue specifically provided by geography for the company. The second one was, with plans to reduce debt, what debt level we can expect in the next one year?
Okay. If I were to give you a sense of a feel of the geographical split, out of our export business, around 10% or so comes from the American markets. Around 35%- 40% comes from European markets, including Russia and the CIS countries. The balance 35%- 40% comes from Asian markets with very little business in, let's say, Australian markets. That's the split in terms of our export market. Add to this, again, our brand only right now is selling in the Indian market. Yes, a little bit of it, of Percol, has now started to sell in the UK market. That's broadly the split between the markets. The debt levels, I think, Chaithanya , if you could give us a color by year end, it should be at what we are having.
As indicated in one of the previous questions, we were at INR 2,000 crore as of December 2024. We brought it down to INR 1,800 crore this month. That's a reduction of close to INR 150+ crore each quarter. In this quarter, from March to June, we brought it down by an additional INR 170-odd crore. Our target is to take it to INR 100 to INR 500 crore probably by September and an additional INR 150 crore by end of this year.
Sir, can you please repeat the number? My instructions.
That would be around INR 1,350 crore as of December 2025.
Okay. Thank you, sir. I have just one more question on the UK India FTA. Do we anticipate any benefit, or are we seeing any increase in query?
Sorry. What did you say?
Sir, my question is regarding the UK India FTA since you mentioned that 30%- 40% comes from the UK. Any.
Not UK. I said Europe. Europe, sorry. I said Europe. Yeah.
Okay. Okay, sir. That's it from my side. Thank you.
Thank you. We take the next question from the line of Abhishek Mathur from Systematix. Please proceed.
Yeah. Hi, Praveen sir. Thank you for the opportunity. Just wanted to check our volume growth guidance. Is it maintained at 10%- 20% that you had mentioned some time back? Also, what was the EBITDA per KG for the quarter if you can sort of guide on that? What is our guidance for this metric going forward? Finally, on the inventory that we keep a few months of inventory, is there some mark-to-market reevaluation that we do which hits the EBITDA? Those are my questions.
Okay. The volume prediction remains the same, 10%- 20%. EBITDA guidance is between 15%- 20% for the full year. That also remains the same. The EBITDA per kilo is approximately, if I'm not wrong, around between 125 to 135, somewhere in that range. There won't be any impact on the EBITDA because of the inventory that we carry. Once we have sold the coffee, that rate remains. There is no change in the rate when the green coffee prices either go up or go down. That won't change our EBITDA. It won't hit our EBITDA at all.
Great. Thanks. Just wanted to clarify one more thing. Do we also do some bulk sales at a lower EBITDA? Is that part of our volume also?
Yeah. We do lots of types of sales, right, from low EBITDA sales to high EBITDA per kilo sales. That is part of our strategy. It's not that we don't kind of think. There are certain things which we don't like to do. We don't like to do, you know, a pillar coffee or an adulterated coffee and things like that. That quality we maintain. Beyond the point, we also don't kind of do the race to the bottom kind of a strategy. Yes, there are low-margin contracts also which we do.
Great. Thanks for the clarification. That's all from me. All the best. Thanks.
Thank you. We take the next question from the line of Manish Mahawar from Antique Stock Broking Limited. Please proceed with your question.
Yeah, Praveen. I have most of the questions. I'll be answered to you. Data point I wanted to understand. During one K, what was the growth in SDC and FDC? Is it possible to share?
Manish will kind of give us colors separately, but we don't kind of share the, you know, product-wise and the market-wise or customer-wise growths and all that.
Okay. FDC will be better than, it's higher than SDC. That will be right to understand this quarter?
Yeah, directionally, it should be higher than FDC instant coffee.
Understood. Just in terms of, I just wanted to reconfirm the debt number, which I said earlier, right? The number was 1,671 for the, this is a gross debt and net debt, 1,671 for the quarter.
It is still at this.
Net debt. Okay. You said by December 2025, it'll be INR 1,350 , right?
It'll be INR 1,350 crore. The plan is to bring down the debt by around INR 150 crore every quarter.
Okay. Okay. Understood. By March 2026, what was the number you are looking at?
An additional INR 150 crore, so it should be around INR 1,200 crore.
Okay. INR 1,200 crore.
March 24?
Yeah, March 26. March 26.
March 26 would be INR 1,200 crore.
Okay. Understood. The capacity, you said at the 15, right, around 50% utilization at a very basic for all the capacity, right? Can you break it up in terms of India and the Vietnam utilization level?
At a broad level, both the places, and we are taking it as a group only. It's at around 60%, Manish, because the last capacity or let's say the existing capacity is not fully utilized. 10%- 15% is the new capacity utilization. Both these places, the figures are similar.
Okay, 60% at a company level, right? One Q.
Yes.
Yeah. Okay. We have a little bit lower because the new capacity came in the fourth quarter only, right?
That buildup is happening. I think, yeah, there is a little catch-up here. Even in India, there is a catch-up to happen with the full 16,000 tons of FDC that is there. It's like, you know, on a quarterly basis, there could be a little up and down. At the year end, we are looking at a similar kind of utilization at both these places.
Understood. Last one, in B2C, what is the number you said in the call, bracketed revenue?
B2C, basically, almost INR 100 crore we did this quarter. INR 150 crore was the domestic number, out of which INR 100 crore was B2C.
Okay. Understood. Sure. Thanks. That's for myself.
Thank you. Ladies and gentlemen, due to time constraints, we take that as the last question and would now like to hand the conference over to the management for closing comments.
Thank you very much. Thank you, Antique and team, for organizing the call. We will look forward to interacting with you in the next quarter. All the best to everyone.
Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.