The Taste of Freshness

In this article I’ll be talking about the coffee brand Continental Spéciale and the company it belongs
to, that is CCL products Ltd. CCL Products (India) Limited, a listed public company limited by shares
was founded in the year 1994 with the vision of creating only the finest and the richest instant
coffee in the world. Its manufacturing plant is located in Chittoor district of Andra Pradesh, the plant
as a manufacturing capacity of 20000MT(2,00,00,000 KG), it manufactures over 70 varieties and
blends of coffee. Continental Spéciale is 100% pure, granulated soluble instant coffee processed
from carefully selected plantation Arabica and washed Robusta beans blended to perfection for
complete satisfaction instantly. 100g gram of coffee contains 352 Kcal of energy, 69 Gms of
carbohydrates and 19Gms of proteins.

The company's main focus is Europe and Japan where high-end products like freeze dried coffee and
freeze concentrated liquid coffee have a huge market potential. During the financial year ended 31
March 2018 CCL Products (India) spent Rs 198 crore at SEZ in Kuvakolli Chittoor District for
establishment of a new freeze dried coffee plant. The company spent Rs 23 crore at its Duggirala
plant in Guntur district of Andhra Pradesh for civil works and line balancing of plant & machinery.
The enhanced production capacity of the plant at Duggirala enabled CCL Products (India) to cater to
the increased demand for instant coffee in international markets.

CCL Products is India’s largest exporter of bulk instant coffee. However, the company is taking
initiatives to strengthen its footprints in the branded domestic coffee retail market under its brand
‘Continental’. For the same, it has set up a new subsidiary, Continental Coffee Products Pvt Ltd for
marketing the Continental brand across India. This brand is available in 15 states and also on
ecommerce portals like amazon, flipkart, etc. The company has decided to spend 10% of it’s net
profit on branding. The company plans to introduce sachets that are set to redefine coffee
consumption in the country and meet the challenge of its competing beverage tea head-on. It will be
3-in-one sachets in the retail market that will contain instant coffee, spray dried milk powder and
sugar, and the customer would have to just add water to drink it. It will be the first such locally
produced one in the retail market. It will expand its sales in the country not only through promotion
of its own branded products but also by providing private label products to various retail chains. In
this regard, CCL already has a tie-up with Reliance and Spencer’s and is in discussions with various
other retail chain companies in the country. I’ll recommend the CCL products to set up their
distribution channels for the continental brand as soon as possible as it’s a real good product and it’ll
give the Indian coffee customer something new.

The board of directors of CCL Products Ltd. is as follows:

Mr. Challa Rajendra Prasad(Executive Chairman), Mr. I. J. Rao, IRS (Retd.), Mr. Vipin K. Singal, Mr. K.
Chandrahas, IRS (Retd.), Mr. J. Rambabu, IAS (Retd.), Mr. K. K. Sarma, Mr. G.V. Krishna Rau, IAS
(Retd.), Ms. Kulsoom Noor Saifullah, Ms. Shantha Prasad Challa, Dr. Lanka Krishnanand, Mr. Kode
Durga Prasad, IPS (Retd.), Mr. B. Mohan Krishna(Executive Director-Operations), Mr. Challa Srishant
(Managing Director).

The Chief Finance Officer (CFO) is Mr. K.V.L.N. Sarma and the Company Secretary is Ms. Sridevi
Dasari. The subsidiary companies of CCL products are Jayanti Pte Limited, Grandsaugreen SA, Ngon
Coffee Company Ltd., Continental Coffee Pvt. Ltd.

The company is on track to achieve the 10-20 % profit growth for the coming financial year due to
increase in production capacity.
The share holding of CCL products India Ltd. Is as follows –

Category No. of shares Percentages

Promoters 60,232,700 45.28
Foreign Institutions 35,700,560 26.84
Others 16,952,560 12.74
General Public 16,247,413 12.21
Financial Institutions 3,002,104 2.26
NBFC and Mutual Funds 892,583 0.67

Individual share holdings of Promoters -

Name Number of shares %

Challa Rajendra Prasad 13,065,400 9.82
Challa Shantha Prasad 18,270,000 13.73
Challa Soumya 13,175,300 9.9
Challa Srishant 13,722,000 10.32
Mohan Krishna B 1,000,000 0.75
Ajitha Challa 1,000,000 0.75

The major competitors of CCL Prodcuts Ltd. are Tata Global Beverage Ltd., Bombay Burmah Trading
Corporation Ltd., Tata Coffee Ltd., Mcleod Russel (India) Ltd., Jayshree Tea and Industries Ltd., and
Rossell India.

Key Financial Ratios of CCL Products India Ltd.

Ratios Mar’18 Mar’17 Mar’16 Mar’15 Mar’14

Operating Profit 19.99 23.59 20.60 19.04 20.87
Margins(%)
Net Profit Margin 11.87 13.99 12.10 11.11 11.98
(%)
Return on Equity 16.44 18.41 18.34 18.44 20.66
(%)
Debt Equity 0.52 0.18 0.26 0.23 0.31
(Times)
Cash from 72.04 55.45 107.17 64.43 85.36
Operations (Rs.
In cr.)

CCL has a global market share of ~6.5%. It also has a leading market share of 24% in Indian instant
coffee exports CCL exports (contributing over 90% to revenue) to over 90 countries, which have
helped in registering 14% CAGR in revenue and 30% CAGR in PAT over FY2012-17. CCL is likely to
maintain the 17%+ growth trajectory over FY18-20 backed by capacity expansion and new
geographical foray.