COURSE : FINANCIAL MANAGEMENT

SUBMITTED TO -
Dr. S. SUDHA
IIPMB
SUBMITTED BY-
22PGDMABPM31 – N ANIL KUMAR
22PGDMABPM32 – NITHIN P
22PGDMABPM33 – PARVATHI B K
22PGDMABPM34 – PATIL AASHUTHOSH
22PGDMABPM37 – POOJA KUNTA
ABOUT COMPANY

 Continental Coffee Private Limited is a subsidiary of CCL Products (India) Limited which is a listed public
company limited by shares was founded in the year 1994.
 Vision : Creating only the finest and the richest coffee in the world.
 CCL Products Ltd has a global presence, with manufacturing facilities in India, Switzerland, and Vietnam.
The company exports its products to more than 90 countries worldwide, including Europe, the Americas,
and Asia.
 CCL Products Ltd is known for its premium quality instant coffee products, which are marketed under the
brand name "Continental Coffee."
 CCL Products Ltd is a publicly traded company listed on the National Stock Exchange and Bombay Stock
Exchange in India.
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 RATIO ANALYSIS

• Ratio analysis is a financial analysis tool that involves examining and

comparing various financial ratios to evaluate a company's financial
performance and health.
• These ratios are calculated by dividing one financial figure by another,
typically from financial statements such as the income statement,
balance sheet, or cash flow statement.

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 PROFITABILITY RATIO OF CCL PRODUCT

 The gross profit margin has decreased from 41.41%

Profitability Ratio of CCL PRODUCT in March 2020 to 24.73% in March 2022, indicating
45
that the company's profitability from sales has
41.41
declined.
38.32
40
 The operating margin and net profit margin have also
35
31.84
decreased from 38.32% to 21.39% and from 29.04%
29.04 28.44
to 13.78%, respectively. These ratios suggest that the
30

24.73
company has been less efficient in generating profits
25
21.39
after accounting for all operating expenses and taxes.
20 17.72
19.95
 The return on assets has decreased from 17.72% in
13.78
2020 to 7.87% in 2022, indicating that the company
15
10.82
has been generating a lower return on its assets over
10 7.87 time.
 Overall, these ratios suggest that the company's
5
financial performance has deteriorated over the past
0 three years, and the company may need to take steps
Mar-20 Mar-21 Mar-22
Gross Profit Margin (%)
Return on Assets (%)
Operating Margin (%) Net Profit Margin (%) to improve its profitability and return on assets to
ensure its long-term financial health.
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 Turnover Ratios of CCL PRODUCT

Turnover Ratios of CCL PRODUCT

• The asset turnover ratio has decreased
significantly from 61.03% in March to 0.6% in
70
61.03 2022, indicating that the company has been less
60 54.24 efficient in generating revenue from its assets.
This could be due to various reasons, such as a
50
decrease in sales or an increase in the value of the
40 company's assets.
• The inventory turnover ratio has also decreased
30
from 4.39% in 2020 to 1.49% in 2022, suggesting
20
that the company has been less efficient in
managing its inventory. This could be due to
10 4.39
3.18
1.49
various reasons, such as a decrease in demand for
0.6

0
the company's products or an increase in the
Mar-20 Mar-21 Mar-22 company's inventory levels.
Asset Turnover Ratio(%) Inventory Turnover Ratio (%)

Sample Footer Text 5

 Debt to Equity(%) Ratio of CCL PRODUCTS

Debt to Equity(%) Ratio of CCL PRODUCTS • The provided ratios show that the company's debt
to equity ratio has fluctuated over the past three
years. In March 2020, the debt to equity ratio was
0.5 0.46 0.46, which indicates that the company had a higher
0.45
level of debt financing relative to equity financing.
0.39 However, this ratio decreased to 0.35 in March
0.4
0.35 2021, indicating that the company relied less on
0.35 debt financing during that year.
0.3
• In March 2022, the debt to equity ratio increased
slightly to 0.39, indicating that the company had
0.25
slightly more debt financing relative to equity
0.2 financing compared to the previous year. Overall,
0.15
these ratios suggest that the company has used a
mix of debt and equity financing to finance its
0.1
operations over the past three years, with some
0.05 fluctuations in the level of debt financing.
0
Mar-20 Mar-21 Mar-22

Sample Footer Text 6

 PROFITABILITY RATIOS OF TATA COFFEE

Profitability Ratios of Tata Coffee • The company's gross profit margin has fluctuated
over the past three years, decreasing slightly from
25
20.05% in 2021 to 18.55% in 2022.
• However, the company's operating margin and net
20.05
20 18.55
profit margin have remained relatively stable,
16.76 indicating that the company has been able to
15.6 15.56
maintain profitability despite changes in gross
15 13.68
12.46
profit margin.
12.17
• The company's return on assets has increased
10
10.17
from 5.79% in 2020 to 7.47% in 2021, before
7.47 7.13
slightly decreasing to 7.13% in 2022.
5.79 • This suggests that the company has been able to
5 generate a higher return on its assets, but may
need to continue monitoring its performance to
ensure that it can maintain or improve its return
0
Mar-20 Mar-21 Mar-22 on assets over time.
Gross Profit Margin (%) Operating Margin (%)
Net Profit Margin (%) Return on Assets(%)
Sample Footer Text 7
 Turnover Ratios of TATA COFFEE

Turnover Ratios of TATA COFFEE

56.94
60
54.6 • The decrease in the asset turnover ratio
from 56.94% in 2020 to 0.59% in 2022
50
suggests that the company's efficiency in
generating revenue from its assets has
40
significantly declined over the years.
• The decrease in the inventory turnover
30 ratio from 2.86 in Mar-20 to 0.86 in Mar-
22 suggests that the company is taking
20 longer to sell its inventory, which could
result in a buildup of unsold inventory
10 and reduced profitability.
2.86 2.66
0.59 0.86

0
Mar-20 Mar-21 Mar-22

Asset Turnover Ratio(%) Inventory Turnover Ratio (%)

Sample Footer Text 8

 Debt to Equity(%) of TATA COFFEE

Debt to Equity(%) of TATA COFFEE

0.07 0.07
• The company's debt to equity ratio has
0.07
remained relatively stable over the three
0.068 years, indicating a consistent financing
structure.
0.066
• A debt to equity ratio of 0.06-0.07 suggests
0.064 that the company has relatively low debt
levels and is relying more on equity financing
0.062
0.06
to fund its assets.
0.06
• This could indicate that the company is
managing its financial risk well and has a
0.058
solid financial position.
0.056

0.054
Mar-20 Mar-21 Mar-22

Sample Footer Text 9

 RESULT

Overall, both companies have CCL Products has a higher

maintained a healthy financial Asset and Inventory Turnover
position with a low Debt to Ratio, while Tata Coffee has
Equity Ratio. higher profitability ratios.

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 2/1/20XX

PARTICULARS FEATURES FEATURES

Produces & exports Instant coffee Various types of coffee

FORMS • Spray-dried • Instant Coffee

• Freeze-dried • Roast Coffee
• Agglomerated • Ground Coffee
• Green Coffee Beans

company’s products • Continental Coffee • Tata Coffee Grand

• SLN Coffee • Tata Kaapi

• Four Seasons Coffee • Coorg Coffee

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 New Product Introduction:

 In 2021- CCL Gold  In 2020 - Q-Grader Coffee

1. Premium freeze-dried coffee 1)Premium roast and ground coffee.

 ANOTHER MAJOR DEVELOPMENTS  The company has also been exploring

opportunities in the ready-to-drink coffee
1. Ready-to-drink coffee market.
market.
2. Similarly in 2022

 Soluble Instant Spray Dried Coffee Powder,

 Spray Dried Agglomerated / Granulated Coffee,

 Freeze Dried Coffee

 Freeze Concentrated Liquid Coffee.

Capex Plan: Capex Plan:

 CCL Products Ltd stated that it has planned a  In its annual report for the fiscal year 2020-21, Tata
capital expenditure of approximately Rs. 250 crore Coffee Ltd stated that it has planned a capital
for the next three years. expenditure of approximately Rs. 170 crore for the

 The company plans to use the funds to increase its next three years.

production capacity, modernize its manufacturing  The company plans to use the funds to increase its
facilities, and invest in research and development. production capacity, modernize its manufacturing
facilities, and invest in research and development.

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Stock market information on share prices, dividend
declared and related ratios

 Share price: As of march 2023, the share price of CCL Products Ltd was around
558.20 INR on the NSE and 557.55 INR on the BSE.
 Dividend declared: CCL Products Ltd has a history of paying dividends to its
shareholders.

 In the quarter ending March 2023, CCL Products (India) Ltd has declared
dividend of ₹3 - translating a dividend yield of 1.43%.

 CCL Products (India) Ltd.’s revenue was ₹535.65Cr in the quarter ending
December 2022. The revenue grew by 26.45% year on year basis since last
quarter.

 CCL Products (India) Ltd.’s profits were ₹73.06Cr in the quarter ending
December 2022. The profits grew by 24.95% year on year basis since last
quarter.
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RATIOS
1.Price-to-earnings (P/E) ratio : The P/E ratio is a commonly used valuation ratio that compares a company's share price to its earnings per share. As of march 2022, CCL Products Ltd had a P/E ratio of around
26.28

2.Price-to-book (P/B) ratio: The P/B ratio compares a company's market value to its book value (i.e., the value of its assets minus its liabilities). As of March 2022, CCL Products Ltd had a P/B ratio of around
4.29

3.Return on equity (ROE): ROE measures a company's profitability relative to the amount of equity invested by shareholders. As of 2022, CCL Products Ltd had an ROE of around 16.33%.

4.Debt-to-equity (D/E) ratio: The D/E ratio measures a company's leverage (i.e., the amount of debt it has relative to its equity). As of March 2022, CCL Products Ltd had a D/E ratio of around 0.45, which
suggests that the company has a relatively low level of debt.

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 DuPont Analysis:
It is used to analyze the return on equity (ROE) of a company.

Done in 3 steps;

Profitability:

Net Profit Margin = Net Profit / Revenue

In 2022, CCL reported a net profit of Rs. 12719.92 Lakhs and revenue of Rs. 95422.24 Lakhs.
Therefore, the net profit margin was 13.33%.

Efficiency:

Asset Turnover Ratio = Revenue / Total Assets

In 2022, CCL had total assets of Rs. 161550.91 and revenue of Rs. 95422.24 Lakhs. Therefore, the
asset turnover ratio was 0.5906.
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Leverage:

Equity Multiplier = Total Assets / Shareholders' Equity

In 2022, CCL had total assets of Rs. 161550.91 Lakhs and shareholders' equity of Rs. 99335.8
Lakhs. Therefore, the equity multiplier was 1.626.

ROE:

Return on Equity = Net Profit Margin x Asset Turnover Ratio x Equity Multiplier

= 0.133 x 0.59 x 1.626

= 12.805%

Therefore, the DuPont analysis of CCL shows that the company's ROE of 12.805% in 2022
was driven by a net profit margin of 13.33%, an asset turnover ratio of 0.59, and an equity
multiplier of 1.626.
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 Return On Equity (%)

35.00
30.15
30.00

25.00
19.33
20.00 17.09

12.80
15.00

10.00

5.00
0.19 0.30 0.17 0.13
0.00
Mar-19 Mar-20 Mar-21 Mar-22

RETURN ON TOTAL EQUITY RETURN ON EQUITY %

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 PROSPECTIVE AGRIBUSINESS PROJECT

Project: “Establishment of a coffee processing plant”

NPV @12%
CF DF PV
-40,95,575
57,609 0.893 51436
3,19,195 0.797 254460
5,63,955 0.712 401412
13,83,693 0.636 879362
21,45,233 0.567 1217263
1781976 0.507 902804
17,46,634 0.452 790089
TPV 4496826
NPV 4,01,251

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 NPV @ 20%
CF DF PV
-40,95,575
57,609 0.833 48007
3,19,195 0.694 221662.8472 IRR CALCULATION:
5,63,955 0.579 326362.7604
13,83,693 0.482 667290.4249
21,45,233 0.402 862121.0747
1781976 0.335 596780.0836 L + PV@ L – original investment (H-L)
17,46,634 0.279 487453.6029
TPV 3209678 PV @ L – PV @ H
NPV -8,85,897

Calculated IRR
L DF 0.12 L PV-O 401251.224
H DF 0.2
(H-L) 0.08 L PV-H PV 1287148.264
PV @L 4496826.224
PV@H 3209678 L PV-O/L PV-H PV 0.311736601
calculated IRR 0.1449
14%
 Initial investment 40,95,575

year 1 year2 year3 year4 year5 year6 year7

₹ 57,608.60 ₹ 3,19,194.50 ₹ 5,63,954.85 ₹ 13,83,693.43 ₹ 21,45,233.11 ₹ 17,81,975.78 ₹ 17,46,634.39

INITIAL INVESTMENT 40,95,575

For 4 years money recovered is Rs. 23,24,451
the remaining amount is 17,71,124, hence
Amount recovered for 4 yrs 2324451.375
=4yrs + 17,71,124/ 2145233 × 12
=i.e., 4 yrs 10 months
Remaining to be recovered 17,71,124

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 Interpretation: IRR is in between ideal range ie.,12-15% which means the investment
is a net gain because the financial rates will certainly be lower but earnings at a much
higher rate.
For 4 years money recovered is Rs. 23,24,451 the remaining amount is 17,71,124,
hence
4yrs + 17,71,124/ 2145233 × 12
i.e., 4 year’s 10 months.

In conclusion, the CCL company may go for establishment of ‘Coffee Processing Plant’ as
the IRR is about 14% and the payback period is about 4 year 10 months

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Thank You !!!

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