Consumer packaging mentions that coffee is manufactured by CCL Products Pvt. Ltd and marketed by Continental Coffee Pvt. Ltd. Does anyone know ownership /shareholding pattern of Continental Coffee Pvt. Ltd.? Bit concerned with profits being siphoned to promoter owned entities based on my experience with smaller food based listed companies.
Disclosure - No investment but tracking
CCL Products Ltd AR 2019 notes
Management has continued it’s emphasis on the domestic market in AR 2019. Company has shown good growth in domestic sales numbers although it’s small part of sales right now. Capacity utilisation of new SEZ plant and domestic sales growth will be key growth triggers in FY20. SEZ plant was commissioned in April and management guided for 50% capacity utilisation in FY20. Company is making good cash profits and without any major capex in FY20 there should be reasonable amount of debt reduction in FY20.
Key points in AR
1,08,142 Lakhs and the net profit of the Company is 15,489 Lakhs.Regards
Harshit
Those who track CCL products.
Have a small question.
Ccl has a subsidiary in switzerland, which is in agglomeration and packaging.
Can any1 tell what they agglomerate? And they outsource the instant coffee from?
As so many here track this biz, looking for a quick reply.
Thanks !
I wanted to see the historical trend of the management performance by comparing the sales, net profit, dividend payout and management remuneration.
Please let me know what you think about this approach.
Here is a chart of the numbers, base lined to 1 starting from FY 2010.
Source code:
import pandas as pd
import matplotlib.pyplot as plt
FY_2010 = 4.2287324
FY_2011 = 2.2851753 + 1.41
FY_2012 = 3.7037 + 0.3458
FY_2013 = 5.9259 + 0.3298
FY_2014 = 8.68 + 0.3298
FY_2015 = 9.5535 + 0.1245 + 0.4500 + 0.3298
FY_2016 = 10.6035
FY_2017 = 13.8955
FY_2018 = 15.487
FY_2019 = 15.6846
data = {
'Remuneration':[FY_2010, FY_2011, FY_2012, FY_2013, FY_2014, FY_2015, FY_2016, FY_2017, FY_2018, FY_2019],
'Sales':[ 437, 364, 502, 651, 717, 881, 932, 976, 1138, 1081],
'NetProfit':[28, 26, 36, 47, 64, 94, 122, 135, 148, 155],
'DivPayoutPct':[7, 10, 18, 14, 25, 21, 27, 25, 22, 30],
'Year':['2010', '2011', '2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019']
}
df = pd.DataFrame(data, columns = ['Remuneration', 'Sales', 'NetProfit', 'Year','DivPayoutPct'])
df['DivPayout'] = df.NetProfit * df.DivPayoutPct * 0.01
df.Remuneration = df.Remuneration / df.Remuneration.iloc[0]
df.DivPayout = df.DivPayout / df.DivPayout.iloc[0]
df.Sales = df.Sales / df.Sales.iloc[0]
df.NetProfit = df.NetProfit / df.NetProfit.iloc[0]
# multiple line plot
fig = plt.figure()
fig.suptitle('CCL. Sales vs Net Profit vs Remuneration', fontsize=10)
plt.plot( 'Year','Remuneration', data=df, marker='o', markerfacecolor='blue', markersize=8, color='skyblue', linewidth=4)
plt.plot( 'Year','Sales', data=df, marker='o', color='brown', linewidth=1)
plt.plot( 'Year','NetProfit', data=df, marker='o', color='green', linewidth=1, linestyle='dashed')
plt.plot( 'Year','DivPayout', data=df, marker='o', color='purple', linewidth=1, linestyle='dashed')
plt.legend()
plt.yscale("log")
plt.draw()
Not a Recommendation.
Disc: Invested (about 5% of portfolio).
CCL Products - Initiating Coverage - 09092019_11-09-2019_08.pdf (2.8 MB)
Disc - Recently added to portfolio.
Results for Q2 is out. Does not look like a good result. PAT of 42 cr aided by incorporating new tax rate.
Con Call Notes;
CCL Spent 11 cr on marketing in Q2. Hope to reap the benefit in coming quarters. This is a one-off at the moment.
4 cr in interest cost due to SEZ
5 cr licenses in current quarters (i think in Q3).
Margin number will look better in the subsequent quarters.
SEZ- Projection of 50% utilisation in Fy20.
Packing Unit - Work started.
Vietnam - Started expansion. Expected to compete in Q1 FY21
Global market- become competitive with pricing due to bumper stock in Brazil. As a result, Brazil is competitive. Vietnam is better in term of quality so that the customer cannot just shift easily from one country to another.
Brazil deal is NOT ratified by EU, so the tax remains at 9%. Vietnam has 3% import duty with EU (Brazil has 9%). EU has agreed to bring it down to 0%, but the treaty is not yet ratified yet. It is not rejected either, so it could still happen.
The same steady will help us in future. We have numerous blends which is helping us grow. The companies which have blends and variation and tastes different for Brazil.
So only companies which are genetic will shift to Brazil, other will remains with us. -
US Market-
India -
New Product launch- Cold Bru- Introduced this product in EU and US.
Cash conversion is deteriorated as compared to last year
Sales and PAT growth- 5 to 10 %.
Updates on 01-Nov- Here is con call transcript
CCL_BUY_Edelweiss_29.10.19.pdf (1.3 MB)
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=96645dfb-5f6e-43fa-a05e-134636482db9
Not sure about need of this new subsidiary .There are already 4 subsidiaries in similar businesses .
| SL. NO. | COMPANY NAME | HOLDING PERCENTAGE |
|---|---|---|
| 1 | Continental Coffee Pvt. Ltd. | 100.00 |
| 2 | Continental Coffee SA | 100.00 |
| 3 | Jayanti Pte.Ltd. | 100.00 |
| 4 | Ngon Coffee Company Ltd. | 100.00 |
The video ends abruptly but gives a sneak peak in to their vision for retail foray in India
Bumper coffee production in Brazil resulted in Coffee prices coming down which might impact CCL products margins. This could be the reason stock hitting 52w low.
But this might be a great opportunity to add this stock at lower levels as prices only correct during crisis.
http://content.icicidirect.com/mailimages/IDirect_CCLProducts_QC_Nov19.pdf
Disc - Invested and adding.
But the management has always maintained that fluctuations in coffee prices doesn’t impact them as they work on cost+ basis.
Management said that any price increase doesn’t impact them as they pass on the price increases to customers but when prices drop why would customers pay them high price when customers might get it from other players from Brazil at much lower price. B2C scale is what is to be seen in this company.
The pass through model applies both for coffee prices going up or down.
Problem is that analysts only look at topline growth. The moment green coffee prices go up, sales will look up significantly.
CCL buys green beans from domestic market (primarily Chikmagalur, Karnataka) as well as imports it from Global markets (Vietnam, Indonesia, Africa countries). The company places orders for the green coffee only on receiving the order for instant coffee and make back to back arrangement for green beans. In this way it is not affected by fluctuations in the green coffee beans prices or the coffee prices. In nutshell, CCL operates on fixed margins without carrying risk of up and down in the coffee prices.
Despite management repeating this point for almost 100 times. Analyst keep asking about green coffee prices in every concall. I’ve personally read more than 6-7 concalls, there’s not even a single call in which less than 4-5 questions were asked about green coffee prices.
