CCL lines up Rs 200-crore capex

Q2 net up 48 per cent.

Hyderabad-based CCL Products (India) Limited, which is into production and export of coffee, has drawn up Rs 200-crore immediate capital expansion plans to more than treble its existing production capacity.

The company also plans to introduce liquid coffee production into the Japanese market in addition to its existing lines of instant coffee.

CCL aims to enhance the combined production capacity of all the four kinds of instant coffee to 25,000 tonne by the year 2008-09 from the current 8,000-tonne capacity at its facilities in Guntur district.

The targeted capacity expansion would qualify the company as the single largest production capacity after the multinational Nestle's in the world, according to Challa Rajendra Prasad, chairman & managing director of CCL Products.

Addressing a press conference in connection with the announcement of the second quarter results, Prasad said Rs 150 crore of the total capital outlay would be spent during the current financial year alone, and the capacity would be increased by a couple of more thousand tonnes by December 2006.

The company has been making rapid strides in the private labelling business in the recent past and has already increased the capacity by over 2,000 tonnes from over 6,000 tonnes last year. It aims to achieve 15,000-tonne capacity by March 2007. It would meet most of the capital expenditure through internal accruals.

The company reported 48 per cent growth in its net profit at Rs 12 crore during the quarter ended September 2006, compared with Rs 8 crore in the corresponding quarter last year, on a standalone basis. Net sales was up 61 per cent at Rs 50 crore, compared with Rs 31 crore in the corresponding previous quarter.

On a consolidated basis, net profit was at Rs 12.65 crore for the quarter ended September 2006. Net sales was at Rs 86.47 crore. CCL had acquired UK-based Associated Coffee Merchant International Limited in the year 2003

The company, whose major business comes from private labelling across 41 countries, has no plans of entering the overseas market under its brand name.

"Our business is primarily dependant on the existing brands in those markets and we would not like to compete with our own clients," Prasad said while adding that they were open to such an idea related to the Indian market.

According to him, some big players in the coffee business had approached the company to enter into the domestic market with a branding.

He said the company would emerge as one of the very few players having all the four lines of instant coffee production, including liquid coffee, from January next year. It hopes to cross the Rs 400-crore turnover mark next year.