CCL Products


(Gary) #249

If I recall correctly - they were planning to get to 100 cr branded sales this year. So clearly the branded business - which is a major factor in rerating - seems to not have played out.

Any thoughts on why is this. Because I see the reviews for continental are quite good on Amazon and flipkart.


(Kumar Saurabh) #250

As per concall, they mentioned the new leader dedicated to branded business has decided to completely revamp the business model and instead of going for revenue, has decided to go for higher margins,so, we need to see how it pans out. I am a bit surprised as in how can you pitch same product as a low margin product and then all of a sudden decide that you want to sell as premium product.


(rupaniamit) #251

Below table shows their Branded B2C sales growing at good pace in last 3 years:

image

Have to keep in mind that they have not gone pan India with their branded B2C retail play. This will be very slow and gradual progress as they succeed in current geography and then move to neighboring states.

Management is targeting 100cr of branded sales (B2C + B2B) in FY19. I completely share @suru27’s skepticcal view on management suddenly selling it as premium product and compete with likes of Nestles.
Will have to see how their new price point stacks up vs competition.


(Jaclyn) #252

With heavy discounts the gross margins were 5% to 8% range. Mr. Praveen Jaipuria has removed this and thus the margins increase. Probably the product price may remain the same. Also there was mention that these sales were happening using credit which Mr. Jaipuria changed it cash sales. These steps lead to the change in the margin to the CCL without the consumer being affected. In other words change of working capital management. That is how I interpret it.