Ladies and gentlemen, good day and welcome to CCL Products (India) Limited Q2 and FY 2026 earnings conference call, hosted by Nirmal Bang Institutional Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference to Mr. Dipak Saha from Nirmal Bang Institutional Equities. Thank you, and over to you.
Thank you so much. Good morning, ladies and gentlemen. On behalf of Nirmal Bang Institutional Equities, I welcome you to the Q2 FY 2026 earnings call of CCL Products. The management today is represented by Mr. Challa Srishant, Managing Director; Mr. Praveen Jaipuriar, CEO; Mr. B. Mohan Krishna, Executive Director; 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, and over to you, Praveen.
Thank you, Deepak, and thank you for setting up this call. Good morning, everyone. I welcome you all to the second conference call of FY 2025-2026. Now, I'll give a brief overview of the company's performance for the second quarter and the first half of the year, and thereafter, we will open the floor for questions. As far as the numbers are concerned, the group has achieved a turnover of INR 1,128.21 crores for the second quarter, as compared to INR 738.74 crores for the corresponding quarter of the previous year, achieving a growth of 52.7%. The EBITDA stands at INR 198.61 crores as against INR 137.62 crores, which is a growth of 44.3%, while PBT is INR 127.09 crores, which grew at 45.5%, and the net profit stands at INR 100.86 crores, with a growth of 36.4%.
As far as H1 is concerned, the group has achieved a turnover of INR 2,186.25 crores as compared to INR 1,513.37 crores for the corresponding half of the previous year, achieving a growth of 44.5%. The EBITDA stands at INR 360.05 crores as against INR 269.23 crores, which is a growth of 33.7%, while PBT is INR 221.28 crores, growing at 26.8%, and the net profit stands at INR 173.31 crores, with a growth of 19.2%. The domestic market continues its growth momentum with a gross sales of INR 160 crores in the second quarter and INR 310 crores for the first half. Out of this INR 310 crores, almost INR 210 crores was the branded business, and there is a continuous market share improvement across channels and states as we speak. As far as the green coffee scenario is concerned, the green coffee prices continue to be volatile. There was some softening in Q1, which we saw.
Post-Brazil supplies, but then the prices went up again in Q2, and the news about Vietnam crop has been conflicting right now, so the prices continue to be volatile. We will wait and watch till the month of December when the crop starts to flow in. That's when we'll get some idea where the prices are settling down. That is a brief note from our side. Now, I open the floor for further questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 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. The first question is from the line of Abneesh Roy from Nuvama.
Yeah, thanks. Could I go ahead?
Yeah, I can hear you.
There's a lot of background noise. Thank you.
Yeah.
My first question is on the last point which you made in terms of coffee clarity coming in December. In terms of crop, if you could tell us till now what is the indication? We have seen many agri-commodities globally and in India also. They have been slightly soft on leaves, and we are seeing Robusta and Arabica. The chart is a bit divergent. If you could comment between the two, what is the sense you are getting in terms of pricing in the next three months?
Actually, as I was mentioning, Abhishek, there have been conflicting reports, and therefore you are seeing some divergent chart movements across both the types of coffee. As we speak, what has happened is that, and this I have been mentioning in our previous calls as well, considering coffee is so much traded, there is a lot of speculative tendencies that have crept in, which means that conflicting reports keep coming in as far as the crop is concerned. Till two weeks before, we were getting good news about the flow of crops in Vietnam. Last week onwards, we have heard that there has been a certain amount of flooding in some coffee-growing region of Vietnam, which could impact the supplies. Therefore, it has become very, very difficult to predict which way the prices would settle.
Therefore, there is no other way but to wait till December to see how the crop flows happen and where the price settles in. While I agree that a lot of agri-commodities have softened, settled in, coffee somehow remains to be volatile. This also points to the fact that the demand has been robust for coffee, which means that the volatility is easier to manage when the demand is pretty robust. In most of the other commodities, you'll see that generally softening happens at the demand side as well. That settles the demand and the supply gap. Here, considering the demand has always been robust, the supply fluctuations have led to these kind of price volatility.
Last question on the branded coffee in India. If you could tell us in the e-commerce and quick commerce, what kind of share performance you have had, market share performance, and which channels you have a good presence? The number one player is still seeing 20%-25% sales growth. Of course, a large part will be the inflation. How are you doing? Both the number one and number two seem to be doing quite well.
Yeah, Abhishek, I think if you see our numbers, when it comes to growth, we are almost growing at 40%-50% at least in the first half. Our growth has been very, very robust, and these are backed by volume growth as well. It's just not price increase. Almost 25%-30% out of this is due to the volumes itself. That's a pretty strong growth, and we are gaining market shares, as I told, not only in states but also in channels. Now, again, we look at it in two ways. One is the southern markets, where we are trying to drive penetration. Here our presence in general trade and modern trade and e-commerce are equally strong.
When it comes to other markets like the northeast and the west, where our distribution may not be so penetrative as it is in the south, our presence in e-com and modern trade is very strong. As we speak, we are pretty well positioned, and in fact, our channel shares in e-com and modern trade are much better than our overall market shares. We are doing pretty well in all the platforms, so as to say.
Will it be high single-digit market share? E-commerce, quick commerce, modern trade?
E-commerce, modern trade, and this thing is double-digit market share, Abhishek.
Pan India?
Pan India. Yeah, see, most of the platforms, we are double-digit market shares. Both in modern trade and in e-commerce. That is very good news. In some of the states, we are now pretty much, let's say, if you were to take the states of Andhra Pradesh and Telangana, where we are very strong, we are number two player now. That is how strongly we are gaining market shares.
Andhra Pradesh, Telangana, you will be displacing the number two?
Sorry?
Who have you replaced in terms of number two? Because number two is the other large MNC.
Let me not comment in detail. You can put your guesses who will be the number two in south because it is pretty clear market who is the number one in north and who is number one in south. The twos are automatically. You can spell it out.
Will you be a bit competitive price compared to the other two players?
It depends, Abhishek. Some places will be competitive. Some places we are higher, and in some places, we will be kind of same pricing. For example, the small pouches and all that, everybody is at the same pricing level, right? In some SKUs, we do become competitive at times, but now you know the pricing has become pretty much kind of. You can change it by channel, by the day, and by the month. A lot of times, we are not necessarily competitive prices. Especially considering the way we have gained market share, a lot of players are kind of pushing very hard on the pricing front as well. Yeah, but there has been a pretty good equity building on the brand also. We are seeing in our equity scores also, there is quite a good uptick in the awareness levels and the conversion ratio.
All of them are leading to good results for us.
Thanks. That's all from my side. Thank you.
Thanks, Abhishek.
Thank you. The next question is from the line of Siddhant Mantri from Invesec Investments. Please go ahead.
Hello. Yeah, am I audible?
Yes, you're loud. Yeah. Please go ahead.
Yeah. Hi, sir. Congratulations on the strong results. Actually, my question was on the working capital changes. There has been some cash release on the inventory side, and also the receivable side. Is this a one-time thing due to the prices, or could you throw some picture on this?
With regard to refills, there are a lot of operational efficiencies which we have brought in. We are pushing for early realization from the customer and then offering the discounts to them in case it appears a little early, and we are renegotiating the contracts as well to reduce the credit period. This has led to a drop in the refillables. Inventory has come down because there is better utilization of the existing stock in this quarter compared to the procurement. This has translated into a better working capital, and this has led to the reduction in the debt.
All right. All right. So, is this going to be a durable, sustainable level, or is this a one-time thing which has happened due to the pricing of the coffee?
Last quarter, we have given the guidance that by the end of September 2025, we have a net debt of INR 1,500 crore. Of course, we are ahead of the guidance. We would like to maintain the guidance that we have given in the last quarter because the seasons that we have ahead, the next two quarters that we have ahead, is basically the harvesting season. There will be a lot of procurement that we have to do in the next two quarters. We will retain our guidance of INR 1,350 crore by December and INR 1,200 crore by March. We are not revising that guidance. We execute it.
All right. All right.
In short, the efficiencies are long-term, but let's say the things that are related to the prices would be because of the lower prices. We'll have to wait and watch to see how things pan out.
All right. Just a follow-up question, sir, about the whole tariff situation and how has that fared till now and going forward, how do you think the situation is going to be?
The tariff situation continues to be the way it was last quarter. India is at high tariff levels. Considering our facilities in India and Vietnam, we were able to divert quite a bit of the U.S. business to Vietnam, which meant that there was no disruption. We continued to be competitive in that market, and we continue to grow in that market. That is the situation as of now. We all are hoping, not just us, the whole of India is hoping that post the deal, the tariffs should come down. If that happens, it is not that we will get an added advantage, but we get a better leeway in terms of deciding where we want to supply from, whether it is India or Vietnam.
All right. All right. Because actually, what has happened is that a lot of coffee from Brazil has been diverted from the U.S. towards Europe. Is that affecting our market share over there? Has that something that has happened?
Yes, Brazil coffee could be coming to Europe, but it is not just during tariff times. See, anytime when the Brazil crop would be cheaper than the Vietnam crops, they become a little more competitive, and therefore, the movement could have happened. Probably, it was a coincidence that tariff also happened and the crops were also good for Brazil this time. I do not see a direct relationship that because Brazil crops are coming to Europe, it has added to our competitiveness. The competitiveness remains the same as it was before.
All right. All right. That's it from my side. Thank you so much, sir, and all the best.
Thank you. The next question is from the line of Naeem Patel from Bastion Research. Please go ahead.
Hi. Congratulations on the good start of numbers, and thank you for the support.
Hello.
Hello. Am I audible?
Hello.
Hello. Am I audible?
As there was no response from this participant, we will move on to the next one. The next question is from the line of Bhavya Sonawala from Samaasa Capital. Please go ahead.
Yeah. Am I audible? Hello. Hi. Am I audible?
Is there an issue with the line? People are not able to connect.
Am I audible?
Yes, you are audible.
You can hear me, right?
Yeah, yeah.
Yeah, yeah. Thank you for having me, and congratulations on the release. Just a couple of questions.
Hello, Bhavya. Hello. Sorry to interrupt you. Actually, your voice is cracking.
Hello? Is it better now?
Yes, it is better now. Please go ahead.
Yeah. Yeah. I just wanted to understand on the capacity utilization, including our new capacities that have come online. Can you give us a blended capacity utilization? What's been in this quarter?
This quarter was around 65%-70% because we had good volume growth this quarter. That is the blended capacity utilization. Almost 100% on the previous capacity, around 15%-20% on the newer ones.
Oh, so newer ones would be 15%-20%?
Yeah. Yeah.
That's what? Okay. Okay. Would we be thinking about any newer capacities, considering if we continue this growth in the next two, three years, or is it time for that conversation to come on?
Right now, I don't think so. We are actively thinking, and as we have always maintained that when we near 80% or 85% utilization, that's when we will start thinking. As we have always maintained, there could be many ways we could kind of source capacity, either we build or we buy. We will take a call maybe two years or three years down the line.
Understood. Just a last question on the branded business. Can you just throw some light on how the marketing spends will go ahead from your considering we're trying to build Percol and a few other brands overall? Are we going to ramp it up? How does it look from your end?
Actually, yeah, we have been ramping up our marketing spends, and that's the reason we have been gaining market share across the board. We will continue to do that because the growths are good. We don't want to kind of slow down the momentum at this stage. We will continue to ramp up our marketing initiatives. The marketing initiatives are being ramped up almost all 360 degrees. Whether it is mass media or whether it is select channels online, everywhere you would see that our presence is increasing by the day.
Understood. Understood. That makes sense. Can you just hint on the volume growth overall, what's been on this quarter?
This quarter was 20%+. Yeah. That was the volume growth this quarter. Yeah.
Okay. Can you just throw some light on this 20%? After quite a while of volume growth being in single digits or high, just high single digits? Anything that has changed?
Not really. I think, as I have always maintained, one-quarter growth sometimes is not really the reflection of the right picture. Therefore, we say that go with the annual guidance and a little long-term view of the company because multiple factors could play in a quarter, but long-term is what will matter. Even things like that, how was the same quarter last year? If you remember, the same quarter last year was not as strong. That base effect also plays in. The long-term guidance of 10%-20% volume growth remains intact. We are currently closer to first half, around 15%. We are looking to maintain that kind of a thing going forward as well.
Understood, sir. Thank you so much. Thanks a lot and all the best.
Thank you.
Thank you. The next question is from the line of Abhishek Mathur from Systematix. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity and congratulations on a good set of numbers. Just wanted to understand, sir, it seems that our EBITDA per kg seems to have improved materially, sequentially, as well as on a Y and Y basis. It would be great if you can give an indicative range. Also, if you can talk about what seems to have led to this improvement, what are the factors that are leading to this? It seems that over the past two years, this has significantly improved as well. If you can talk a bit about that.
This is, if you see, and again, I'm just pointing it to some long-term trends. Yes, it has improved in the last two, three quarters. If you were to see maybe a few quarters prior to that, it had also kind of softened a bit also. I had always maintained that at that point of time, our capacity addition was largely in spray dried. Spray dried, the EBITDA per kilo is lesser than freeze dried. What happened initially, our contribution of spray dried had increased, so the EBITDA per kilo had softened a bit. As the new freeze dried capacity came into picture, which largely happened last quarter, a lot of EBITDA per kilo improved because of the re-entry of, not re-entry, let's say more addition of freeze dried into our sales profile. Our small pack profiles are increasing.
I had always maintained that in tough times, which was last year, we were also looking to, when the volume growths were not so high, we were looking to drive in more efficiencies. That is adding to the growth. Things like domestic market, which is now the additional contribution. Already, the domestic market, first few hundred crores were built on break-even. Now, whatever is happening additionally is also contributing now to the profit. All of these factors are leading to improvement of EBITDA per kilo profile. I always say that there are certain things which are built for long-term. Efficiencies are built for long-term. Quarter on quarter, change in the mix, change in the profile could lead to some fluctuations here and there. Therefore, our guidance does not change largely. Yes, it improves a little bit.
We are given a guidance of EBITDA growth of around 15%-20%. Looks like we'll end up, end the year towards the higher end rather than the lower end. That's what we are looking at. In totality, this is what the scenario is.
Sure, sir. If you can give an indicative range of what was the EBITDA per kg for the quarter or the recent 1H?
If you see, and because we do not share the volume numbers, it is a little bit of a back calculation, but I will give you some range because you are persistently asking for it. You have seen that last quarter, we had mentioned that it was around INR 120. Probably this quarter, there is an increase of INR 10-INR 12. That is where it is. That is the thing.
Sure, sir. That's all from me. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Shirish Pardeshi from Motilal Oswal. Please go ahead.
Hi, Praveen. Srishant, good morning. Thanks for the opportunity. Praveen, more curious, how. With the context, the crop volatility, which is visible, in terms of demand, how the customers are reacting? Because now the price increases are given. Obviously, is there any change in ordering? Is there any change in sentiment from the customer?
Yeah. Yeah. Hi, Shirish. Good morning. Yeah, last quarter, there was a little change in the sentiment because prices had softened, and there were some long-term contracts that we saw coming our way. What happened is that very quickly, subsequently, that whole softening kind of went away. Post the harvest of Brazil and before the harvest of Vietnam, which is going to happen in November, December, the prices again went up, and it remains to be volatile because we are seeing fluctuations almost to the tune of $100 every single or every two days. That is again keeping the people on tenterhooks, and people are still not—a large section of the buyers are not still committed to the long-term because all said and done, while price increases are there, people are still not willing to accept that this is the real price.
Is going to kind of stabilize that. Therefore, still tentativeness is there. I can't say much has changed from the previous quarters as far as the sentiment of the buyers is concerned.
Okay. No, why I'm asking? Because you did fantastically well, and the volumes are very good. In terms of B2B, what kind of volume? Is it higher of 20% or lower than 20%? Because price increment.
Yeah, yeah. It was closer to 20%. And B2C, as I was mentioning just a while ago, was closer to 25%-30%. So, blended, yeah, we were a little upwards of 20%.
Okay. In domestic, what is the business we have? In that, what is the branded?
we did around INR 310 crore-INR 315 crore of business. Out of that, branded is INR 210 crore.
Okay.
In the first half, yeah.
Okay. Now, particularly this quarter?
This quarter was out of INR 210, it was INR 110 was this quarter because if you remember, last quarter was INR 100. It was INR 110 this quarter. Yeah.
In the domestic, because we've been saying that we have been feeding a lot of new markets and the small packs or the pouch packs is growing faster. Is there a significant volume rise you are seeing in the south versus north?
No. In fact, we are seeing more because our bases are small in north, so we are seeing more volume increase and value increase in north. South also remains to grow very, very strongly. At these levels, both are growing well. In south, we are driving more penetration. As you rightly mentioned, we are driving more of small packs, sachets, and getting into smaller towns and into the wholesale business. Whereas in northeast and west, we continue to drive more of variety. E-com, quick com, and of course, the modern trade. From there, we are driving a lot of variety of packs. We have done flavored coffee and things like that. That is what is helping us drive more growth in the other markets.
Okay. There's a little hypothetical, but assume that if the prices remain elevated, what is our Q4 exact net position you aspire to be?
I think CFO had given a guidance of around INR 1,300-INR 1,400 crore. That is what we will probably end up at.
Okay. All right. Thank you and all the best.
Thank you. Thank you.
Thank you. The next question is from the line of Vignesh Iyer from Seaquent Investments. Please go ahead. Excuse me, Vignesh. As there was no response from the participant, we will move on to the next one. The next question is from the line of [Nithyasha from Kamakhya]. Please go ahead.
Hi. Congrats on a good set of numbers. I just wanted to understand the vision of the company going forward. I saw that you have launched products such as iced tea and some non-coffee kind of products. What is the vision here? Do you plan to be just a coffee company or an FMCG company in the future?
I think we have kind of spelt it out. You have spelt it out in your second half. We want to be an FMCG company. We want to build more and more brands. That is our long-term vision. Therefore, you will see our experimentations into some of these categories, which kind of very well complement our coffee category, which is also growing very well. We are wanting to enter into more categories, and we are creating this distribution network. As we grow into smaller towns, probably this entering into other categories will also help us expand. It is like a two-way process. The distribution will help us launch products, and the new products will help expand distribution as well. It is a two-way thing that will also benefit us. Long-term, yes, you are absolutely right. We are looking to be an FMCG company.
Okay. Are we expecting a lot more new kind of product launches this year and next year other than what has already been announced?
I do not see a lot of launches because there are quite a few things that we have launched, and we want to consolidate that. We are experimenting. We are test marketing. You know how we work. We generally want to make sure that in the test market, we make things right and then expand. There are these things like tea in the institutional segment, iced tea for the consumers. We have also done a very small micro or, let's say, a nano test launch of snacks as well. We are looking to kind of make sure that all our P's of marketing are set right before we expand. We have our plates full right now. I do not foresee any more categories getting added very quickly. Yeah, in the background, we keep evaluating things. We are working on a lot of things.
That work keeps happening in the background.
To fund the growth of this new vertical, will it all be done through internals, or in the future, you may require more debt or equity funding? How would you go about it?
Absolutely internal because our whole coffee business now, hopefully this year, we'll end up at INR 420 crore-INR 430 crore, which is profitable. As I said, not only to grow the coffee business, but also for the newer categories, we will have enough internal accruals, not just internal accruals from the company, but from this vertical itself, which is the B2C vertical, which will be able to fund its own growth going forward.
Sir, what was the revenue number of the B2C segment in this quarter?
Yeah, INR 110. I just mentioned.
Sorry, I missed that. Thank you. That's all from my end. All the best.
Thank you.
Thank you. The next question is from the line of Siddharth Purohit from InvesQ Investment Advisors. Please go ahead.
Yes. Hi, sir. So, sir, just one clarification and understanding I would like to have. Earlier, when we used to see a lot of price fluctuations and probably price being elevated and continuously upward trajectory, we used to see a margin pressure. When you started the short-term contracts, it has largely been kind of insulated. You have been largely insulated. Right now, from the customer point of view, does it really make a difference if prices, if at all, start trending down? They will continue to have a short-term contract with you? In that case, again, how do you position your contract going ahead so that we maintain the similar EBITDA per kg?
I think that's a wrong conclusion to draw. Price never determines our margin profile because we always do cost-plus model, yeah? Which means that we try and maintain our margins, whether it is a short-term contract or it is a long-term contract. Yes, long-term contract gives us better vision, gives us better planning. Our supply chain management gets better. Largely, our margin profiles don't change whether it is a short-term contract or long-term contract. The improvement in margin profiles happens because, as we were speaking earlier, product mix, efficiency is getting built at our end, small packs. Now, domestic market is also contributing. All of these lead to better margin profile. Sometimes, therefore, I say some of these stay with us, like let's say things like efficiency building, internal efficiency building, and all that. They will stay with us.
Product mix and all that is also a determinant of how the markets are behaving and how the contracts are coming. That is how things will play out as far as the margins are concerned. Now, where do we focus on? Obviously, we love long-term contracts because it gives us a long-term view. It helps us plan better. Sometimes, we also do not want our clients to go into long-term contracts because of high prices. See, if they go for long-term contracts at high prices, then it is actually a loss for them if the prices fall. It will not lead to anything. It will not impact us in any way. We have a very strong relationship with clients. We guide them on how things—how should they place the contract. At times of volatility, we actually tell them to kind of.
Go for short-term rather than long-term contracts. Yeah, we would love the prices to stabilize as much as possible because long-term contracts obviously are much better in terms of our view in the future.
Okay. Just to move to our book of questions, now that our assets have been capitalized, is it the current run rate of depreciation will be. Is at the peak? Secondly, earlier, we used to have lower tax rates. Now, last two quarters, we have been on the higher side. Is it the normal tax rate that we should be considering going ahead?
I think first, I just answer the first one very broadly because I think your voice was not very clear, so I do not know whether our CFO heard it. Second one, about tax rate, he will clarify. We are already off the peak levels. If you remember, last year, we were at around INR 1,800-INR 1,900 debt levels, yeah? Which has now come to INR 1,580. The net debt will be a little lower than that as well. We are off peak levels as far as debt is concerned. As far as tax rates, I will just ask Chaithanya to clarify to you.
Regarding the tax rate, again, it's a derivative of where the profit has come from. Since we have facilities at Vietnam, we have, as she said, EOE and all. Where the profit earned also determines the tax that we have in the P&L. On average, it would be around 17%. We can take 17% as the average tax rate.
Also, the depreciation is at a peak right now, now that we have capitalized our assets.
Yes. Yes, yes. Depreciation is at a peak. Interest will start slightly moderating. It may not come down significantly because last year, we would have capitalized a lot of interest. In terms of depreciation, it is at the peak level. Interest rates will more or less remain the same. A little bit of moderation.
Thank you, sir. Thanks a lot. All the best to you.
Thank you. The next question is from the line of Nihal Shah from Prudent Corporate Advisory Services. Please go ahead.
Thank you for the opportunity. Am I audible?
Yeah, yeah, you are.
Yeah. Congratulations on a great set of numbers. As we have seen a lot of growth in the segment, can you put some color on the margin profile that we are managing right now in that segment?
Your voice was a little cracking, but what I hear you is that you are asking to give some color on the margin profile, right?
Of B2C.
Yeah. Of B2C. Okay, fine. The margin profile is pretty much similar to what we had seen last year. Again, there are a lot of things that play into it. The more penetrative we are becoming, the more small packs we are selling. Small packs do not necessarily have a very high margin profile. What we are doing is at two levels. One is we are keeping an eye on our top-line growth, and we are keeping an eye on our EBITDA levels. Now, what is happening in between is that we are playing it around so that we keep the momentum happening. At times, we are pushing the brand because some SKUs need to be pushed. At the same time, we are also creating enough pull. That is where it is.
As far as EBITDA is concerned, we are at around 5%-6% EBITDA level for this B2C setup. We will continue to be at these levels going forward because we want to reinvest, as I told you, that not only in driving the coffee growth and distribution, but also making sure that some of our new initiatives also are nurtured and nourished. We will keep using the fund to drive all of this and keep the margins at these levels and continue to drive the aggressive growth.
Oh, okay. Thank you.
Thank you. The next question is from the line of Param Vora from Trinetra Asset Managers. Please go ahead.
Hello. Thank you for taking my question and congratulations on a great set of numbers. Sir, can you give us some light on the 26% stake you took in Mukunda Renewables? What will be the timeline for commissioning and what EBITDA margins can we expect?
There is a dual purpose of this. First and foremost, yeah, as a company, we are a responsible company as far as the energy requirements are concerned. We want to go for greener energy more and more. That was our primary objective to do this or take this project. This project will take around 12-18 months to complete because it is a hybrid thing. Therefore, I am giving you a broad guideline. In 12 months, a certain set of energy will start coming in. In 18 months, the full energy that we have contracted with them will start coming in. Almost 50%-60% of our energy requirements will be sufficed through this arrangement. This will mean that 50%-60% of our energy requirement will be green energy. That is there.
Yes, there will be an improvement in terms of operational costs, but we are looking at it in both ways because we are also kind of spending money upfront to get this thing done, which will mean that there will be a two- to three-year payback period as well. That is where it is. Right now, we are not too predictive about what is the margin improvement that will happen because energy is contributing a very, very small portion into the margin profile. 60%-70%, we all know, is green coffee. That is what will drive the margins going forward.
Okay. Thank you.
Thank you. The next question is from the line of Dipak Saha from Nirmal Bang Institutional Equities. Please go ahead.
Hi. Praveen, sir, one question on the B2C part. If you can double-click on the demand driver, I mean, is it more of out-of-home consumption or in-house consumption that we are seeing? Because if you're doing 40%-45%, I understand base is small, but what is largely driving from the end user perspective? Is it out-of-home or it's in-house consumption or something else? If you can give some color on that.
Let me first, Dipak, give you a little category of this thing. Category, if you see, the out-of-home is growing much faster than in-home, yeah? There is quite a bit of consumption increase. The in-home consumption still is not very euphoric. It is, let's say, if I were to speak of volumes, it is low single digits only. It is not very high. For us, the growth is not necessarily coming from the category growth. We are more focused because we are a very small player. We are a new entrant in the market. Most of our growth is largely dependent on market share gains. That is where our focus is, that how do we gain more and more market share.
Got it, sir. Sir, just a follow-up from the previous participant's question on the investments that we have done on the renewable side. You also highlighted the kind of efficiencies taken in from a working capital point of view and other measures that you are taking. If you can list out all these other different measurements that you are taking to bring operation efficiencies, both on the operation side and as well as it is reflected on the working capital side, it would be a bit helpful for us to understand.
It kind of spans across the whole value chain. Basically, right from making sure that you get the most optimum yields, the better utilization, as we increase our utilization, the fixed cost spread becomes better. You are able to spread towards a higher volume. All of this leads to better efficiencies. Now, energy cost, yes, this will also add. It's like in Hindi, we say, "Boom boom se gada bardha." That's the kind of thing that is going to happen on the efficiency front. Most of this is going to stay. Yes, considering, as I told, as I always tell, 60%-70% is green coffee, which determines where the margins will be. Efficiency building is something that we have taken forward.
Now, if you were to ask, if you were to break it down, very difficult to break it down that, okay, if I got a INR 10 better margin every kilo, how much was it through energy and how much was it through yield improvement? Yes, all of them have kind of added to this INR 10 is what I would like to say.
Got it, sir. And sir, one last thing. I mean, quite structurally, if I see, I mean, our CapEx cycle is behind us. We are talking about debt reduction. Working capital is improving. Your cash flow from operations has gone up quite meaningfully. And B2C has started firing, right? Considering all this, when you are talking about 15%-20% kind of an EBITDA growth, right? There has been steady improvement on the operation efficiency side. Is it fair to say that we are being quite conservative on those numbers? Structurally, not from a near-term point of view, next couple of years, we can actually do even better than that?
Time will tell whether we were conservative or not. Yeah, we kind of, as I always said, one quarter may not be a reflection of long-term performance. When we say long-term performance, we always, and you know, if you were to see CCL, we always have been kind of saying that we want to maintain a steady state of growth. To do that, last conference call, I mentioned that there are times where volume will drive our growth. There are times where efficiency and other aspects, mix will drive our growth. Sometimes a quarter like this happens where all of them come together, so the growth becomes that much nicer. Therefore, I cannot for sure say that this will happen every time. Thus, the long-term guidance remains.
Yes, I do kind of accept that when we had given a guidance of 15%-20%, we could have landed anywhere between 15%-20%. Now, it looks like we probably will land closer to the higher end of the guidance than at the lower end. That is the submission from my side.
Appreciate it, sir. Thank you. Just one last thing before I join the queue. Structurally, now you mentioned that even last con call and today also, you mentioned that. The desire to be a safe and easy company. We have seen the kind of measurements you have taken with Malgudi brand and different other snacks also, some of the experiments that you are doing. If you just can very briefly give your thought process on how we position ourselves from a longer-term point of view. One is coffee business is definitely doing it. Beyond that, what's your vision on that front?
Very clear. I kind of spelling it out again. We want to be an FMCG company. We are building distribution. We were probably the only company six, seven years ago when everybody was kind of focusing on direct-to-consumer and were not ready to build distribution because of the challenges it has. We went the other way around and we went ahead and built distribution because we were clear that if this were to succeed, we probably in future would like to transition ourselves into an FMCG company. That is the thought process. Therefore, seeding of some of these initiatives like Iced Tea or, let's say, a snack, all of this is happening. There are a few categories we are always on the lookout or kind of working at the back end at what could be some of the other categories.
Right now, we have our plates full in terms of driving growths in some of these adjacencies that we have entered into. Going forward, yes, we are putting all our might behind all of these categories and developing ourselves into an FMCG company. Today, as we speak, we are already directly distributing to 130,000 or 140,000 outlets, which is quite significant. We have a belief that since we have built this distribution network, we need to supplement it with some more categories. These more categories will help us go beyond from 150,000 to 2,000,000. Every additional outlet you go, the throughput has to match the cost of going to that outlet. Unless and until we add to our portfolio, this may not be feasible. Keeping all this in mind, our vision and our way forward is pretty much clear.
Yes, while we say so, we always know that all of this has to be taken with a pinch of salt because not every initiative succeeds. Therefore, we are taking calibrated steps, doing test marketing, be sure that in the test market, things are working, and only then we will expand and spend money behind it.
Thank you, sir. This is really helpful. Thank you and all the best for SW.
Thank you.
Thank you. The next question is from the line of Akhil Parekh from B&K Securities. Please go ahead.
Hi. Thanks for the opportunity and many congratulations, Praveen sir, and Susha, for the good set of numbers. It's really heartening to see the gradual and consistent progress that CCL has achieved over the last 10 years and more so specifically in the last five years. My first question is on the branded business, right? We have seen in the last two years, we have maintained 70%-30%, right, in the domestic. 70% comes from branded while non-branded is 30%. In the first half, we see that proportion has gone down to slightly below 50% for branded. In specific pockets, where are we seeing growth in the non-branded part and what has led to that distortion, basically? How should one look at it between branded and non-branded in domestic for the next two years? That's my first question.
Okay, fine. Akhil, again, one of the first things that I've been telling is let's not look at proportions because it's not that we will compromise on any one segment for the other. What it means is that, yes, we would like all our business to come from B2C, but there is a non-branded segment also, which we drive very aggressively. Today, as we speak, almost 80% of the private label that we are doing in India, 80% of private label in India, we are doing. We are aggressively driving that segment as well. We don't want to leave any piece saying that, okay, because we anyways are a coffee manufacturer, we have been in the B2B business for so long, and our ability to deliver on the B2B part is equally good.
What is happening is that we have set up a separate vertical, which is now very aggressively going to all the private labels, the B2B parties in India, and we are aggressively driving the growth there as well. It is more like we are driving equal, very strongly, all the segments. It so happened that that segment, we gained a lot of contracts in the near time. Last six months, we have added two, three more private labels to our kitty, which has led to much better growth there as well.
Sure. The margin profile will be broadly similar between the two?
It depends. If you were to see at a gross margin level, the B2B will be lower. If you look at net margin levels, the B2B will be higher because you do not spend anything on marketing spends and all that. It is like that. We kind of plate contract by contract and target by target, client by client.
Sure. Thanks. My second question, you mentioned that we have reached 1.5 lakh retail outlets. What would be the true potential in terms of the retail outlet reach we can achieve, say, over the next three years?
In the next three, four years, three years at least, we'll try and double it. It will all depend on some of our other initiatives. The more things we add to the portfolio, the speed of reaching the outlets will become that much more bigger. Because now, after 150,000, what happens is that the cost of going to that outlet sometimes doesn't justify the throughput, yeah. When you have other things in your portfolio, then it's getting justified. It really depends on how things shape up in the future. In three years' time, we can definitely double it.
Sure. My last question, slightly short-term based. Usually, what we are seeing in the second half is better than the first half, right? Our EBITDA growth is far better than 20% in the first half, while you are alluding that you maintain 20%+ EBITDA growth for a full year. How should one read about the second half?
Akhil, two things. One is that I think, yes, you're right. Maybe five years ago, we used to see that the second half used to be a little better than the first half. I think the last five years, I haven't seen, in terms of business, I haven't seen much of a difference. Yes, in India, the second half is definitely a little better because India is a little seasonal market. The rest of the markets, like a Europe market, U.S. market, CIS country market, these are generally, and the buying for the second half, the season time also happens pre-season. I don't see much of an impact in terms of sales or margin. Also, a little will depend on how the bases are.
I do not want to dampen the spirits here, but you remember that last year, the second and third quarters were a little weaker than the first and the last. You will see this year, the last quarter will probably be facing a very good last quarter last year as well. That will also determine how the growth level is. I cannot say that this growth will be better off. We will try and maintain as much as possible. Yeah, the guidance remains that we probably will be at the upper end of the 15%-20% guidance of EBITDA growth.
Sure. Thanks a lot. This is very helpful and best wishes to you and [Sridevi] for the coming quarters. Thanks so much.
Thank you. Thank you, Akhil.
Thank you. The next question is from the line of Vaishnavi Gurung from Craving Alpha Wealth Fund . Please go ahead.
Hello.
Hello. Yeah.
Thank you for the opportunity, sir. My first question is on the capacity side. If you can help me with the capacity in India versus Vietnam and the respective capacity utilization.
In India, we have a capacity of around 40,000 metric tons. Vietnam is 36,000-37,000. The total is around 77,000, right? The utilization at a blended level is around, this quarter was 65%-70%. Which means that the old capacity is fully utilized and the new one is at around 15%-20%.
Sir, a follow-up question. When can we expect better capacity utilization for the new capacities added?
The better is a question which can be answered in this way that we are anyways looking at a consistent volume growth. It won't happen that overnight the capacity gets utilized. What will happen year after year as we are driving volume growth, you will see probably every year, maybe 30% additional capacity gets utilized. The new one. That is how the trajectory will be. Therefore, we said in three years' time, three to four years' time, we will look to kind of fully ramp up the capacity. As we have maintained, some of these capacity utilizations are in a step-up process. For any gradual increase also, you have to increase the capacity in such a manner that it takes care of the next three to four years.
Okay. Thank you, sir. The last question is on the revenue side. Our quarter-on-quarter sales have been increasing by 40%-50%, if I'm not wrong, year-on-year basis. Just wanted to ask, how sustainable is that and where do we expect to close for FY 2026?
As you know, this new growth is largely dependent on the green coffee prices and may not be reflective of the long-term performance because it all depends on how the green coffee prices pan out. Therefore, we kind of give you a little color on how the volume growth has been. That is the true picture of our performance. Even our EBITDA growths are mostly in line with the volume growth. Our volume growths this quarter, the quarter gone by, was a little upwards of 20%. The first quarter was closer to 8%-10%. The blended first half is around 15%. We would like to maintain this kind of volume growth going forward.
Okay, sir. Any guidance on the revenue for FY 2026?
Revenue, again, I said that it's a little. Doesn't give you the right picture. We have already done INR 2,000 crore. If I were to INR 2,000 and if the same coffee rates were to hold on, then INR 2,000 will become another INR 2,000. It will be closer to INR 4,000 crore. We will really depend on the coffee prices. Therefore, sometimes there could be fluctuation on the value numbers.
Okay. That's it from my side. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Lokesh Manik from Vallum Capital. Please go ahead.
Yeah. Hi. Good afternoon, Praveen, and team. Praveen, my first question was on the new capacity utilization, 15% you mentioned. What is the size of this capacity you can just refresh?
The new capacity is almost half of the total capacity that we have because almost half, a couple of thousand crores here or there, yeah. INR 35,000, give or take.
Right, right. Right, right. Praveen, my second question is, if I look at the conversion margins, they are at the lower end compared to historical levels. Then, would it be a fair assessment that the mix would have more spray dried compared to freeze-dried?
No, not necessarily because what is happening is also that because of the new capacity, it also has to be fixed. The fixed cost gets added, and therefore, you will see some lowering of the conversion margins here or there. It is not necessarily because spray dried has increased. In fact, our freeze-dried component increased, and therefore, EBITDA per kilo, if you see, are better than previous quarters.
Okay. The new capacity is of freeze-dried, if I'm not mistaken, which is coming up?
Both, freeze-dried also and spray dried also.
Okay. My last question was on the blended business side, on the B2C side specifically. Just give a sense of what would be the, since you mentioned it's profitable now. If the margins, EBITDA margins are at the company level below that, above that. Because of two reasons. One is it is also, you mentioned, contributing to our EBITDA per kg. And secondly, you mentioned that the new initiatives would be self-funded through this vertical. There's a plus and minus kind of scenario. Just getting a sense of where these margins for new businesses would be, B2C business vertical would be compared to the company level.
Yeah. It is lower than the company level. That is because we are reinvesting a lot of this back into the business. If you see the additional volume that is coming, for example, we did INR 200 crore last year, and if we were to do INR 300 crore, what happens is that the additional amount is, and INR 200 crore is the, let's say, the break-even of that INR 200 crore is already built into the business. The INR 100 crore is coming at a much higher clip than it was coming last year. Therefore, I said it started now contributing. At a full level, let's say we have done already INR 210 crore in the first half. There, we are at 5%-6% EBITDA margin, yeah.
Come to think of it, last year, this INR 210 was, let's say, INR 130-INR 140, that kind of a number. That number was break-even. The additional number, the full 5%-6%, is actually contributed by the additional volumes. That is why I said it is now contributing. Having said so, we would want to maintain this 5%-6%, not kind of milk it as of now. As we said, we want to kind of grow the business, not only this business, but also add a couple of other categories which will require investment. Therefore, we will continue to kind of spend at those levels.
Great. Just last one. The B2B business. In this, what would be the revenue for this quarter or half year, if you can share? I missed that. I'm sorry.
Which B2B? India B2B?
Yeah. The private label part.
Basically, in India, first half, we have done around INR 310 crore. If you remove INR 210 crore, almost INR 100 crore is B2B, which is both bulk and private label, right?
Bulk and private label. Okay. These would include the snacks and the new initiatives, the entire vertical?
No, snacks is very small, but hardly anything to write home about. These are very small. This is built into INR 210 crore, not in the, but those will be a few lakh because we are only micro-marketing, test marketing.
Right. Any development on the, or update on the U.K. brand acquisitions that we had done, how is that progressing with some companies?
That's progressing quite well. In spite of the hugely competitive market and a market which requires very, very high level of investment, in spite of that, we are growing. We are kind of adding new accounts. That business is also doing pretty well. We should get a 30%-40% growth in that business as well.
Great. That's it from my side. Thank you so much.
Thank you.
Thank you. The next question is from the line of Manish Mahawar from Antique Stock Broking . Please go ahead.
Yeah. Hi, Praveen. Just Praveen, in terms of EBITDA per kg, I think last two quarters, right, our EBITDA is around INR 120-INR 130 per kg, right? Going forward, maybe 2027, 2028, once our capacity will reach the optimal level, how do you see this EBITDA per kg should be?
Should improve, Manish. Very difficult to put a number, but as we have been speaking, it will improve because of two, three things, as we said, more and more end clients that we are targeting, more and more small packs we are doing. Already, we are building certain efficiencies. That efficiency will stay. It is already there in that EBITDA per kilo that we got last couple of quarters. It is definitely going to increase. If you remember, we probably have kind of advanced it a little bit because two quarters ago, we were saying that when people asked that EBITDA per kilo, when will it increase and all that, we had been saying that.
Because of the efforts that we are taking in terms of changing the product mix, going to the end customers, doing more small pack, the new additional domestic volume, all this will keep adding to the profile. The only thing is that we said that for a year or so, do not expect too much of an increase. Yes, some of that increase has started to build in. Going forward, to put an exact number to this, whether this will increase becomes very difficult because sometimes these things add to the EBITDA per kilo, but the proportion or, let's say, the product profile mix could also change. That is very unpredictable. I cannot for sure say that my product mix profile will remain the same or will improve in the future.
Therefore, we'll remain with this guidance of 15%-20% EBITDA growth year on year, whether it comes through only volume increase or it comes through proportion changes and all that. That is something that we'll keep an eye on. Nothing more or less to add to this from here.
Product mix side, I think so your FDC and FDC mix will remain, you know, right, whenever you reach the optimal level, it will be stagnant all that time. You know the capacity numbers right now. Only I understand small pack and bulk proportion may change, which you can't predict. Anyways, operating level fixed cost, you know the company, right? Definitely, you must be knowing the per kg ballpark number can come over the next two years.
No, no. I'll tell you, even the mix of SD and FD sometimes is difficult to predict because right now, let's say this quarter, we had a very good FD mix. That's the reason you saw a much better profile, right? Now, if you know, in India also, we had increased 16,000 tons of SD, and Vietnam also 16,000 tons of FD. If you see that our SD profiling is, in fact, capacity profiling has been more than FD, right? That also plays a role. Therefore, predictability becomes a little challenging here.
Okay. Understood. Second question, in terms of debt number, I think loans, right? You said we will close by INR 1,300-INR 1,400 crore by this year-end, right? Already, first half, if I look at the number, I think INR 1,500- INR 1,600 crore of gross debt, and we are sitting on a cash of around INR 50-odd crore roughly number in the balance sheet, right? We already have reached a number of net debt number of around INR 1,250-odd crore, right? You are not expecting any improvement or debt reduction in the second half?
Yeah. It depends. Again, that is what the CFO was mentioning. It will depend on the Vietnam crop, how the prices and all that pan out. Therefore, we do not want to be committal on saying that it will go down. Let us see how it happens. Yeah, definitely, it will not go up. This is the guidance we had given at the start of the year. Yes, it has got advanced by a quarter or a couple of quarters. As of now, let's maintain this guidance rather than being bullish on that because we will want to wait for the Vietnam crop to come in.
Okay. Understood. And last one, give me a question.
Sorry to interrupt. Manish, hello. Sorry to interrupt. Due to time constraint, we need to close this call.
Yeah. Sure. Just last booking grouping question, if I may.
Yeah, yeah. Please go ahead, Manish.
Yeah. Can I, possible, if the number available for your Vietnam and your South subsidiary, which is LDC, KCD number for first half, EBITDA and PAT?
Separately, I'll ask this thing to give some color, but you'll get the number at the end of the year.
Okay. Sure. No, sure. I'll stay calm.
I'll be able to give you some color with it.
Sure, sure. Thanks. Thanks and all the best.
Okay. Thanks, Manish.
Thank you. Due to time constraint, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Yeah. Thank you, everyone, for joining the call. Thank you, Nirmal Bang and team, to arrange this call. We will look to meet you all again in the next quarter. Thank you, everyone.
On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.