CCL setting up freeze-drying coffee plant in Guntur

Mulls options to raise $15-20 million

City-based CCL Products (India) Limited, exporter of instant coffee, is setting up a plant for freeze-drying coffee in Guntur, which is likely to be the first in India.

This apart, it is also looking at increasing the capacity of its existing spray-drying coffee plant from 5,000 tonnes per annum (TPA) to 6,500 TPA.

CCL (formerly Continental Coffee Limited) is investing Rs 100 crore for this purpose, out of which Rs 65 crore is likely to be spent in this fiscal. A part of this amount has already been spent in the last financial year.

CCL is also looking at various options of raising capital of between $15 million and $20 million. The options range from foreign currency convertible bonds (FCCBs) to loans and even equity.

Addressing a press conference, Challa Rajendra Prasad, chairman and managing director of CCL Limited, said, "We are setting up a plant for freeze-drying coffee in Guntur. We have imported almost all the 50 containers that are necessary to set up the plant, and are hopeful of starting the production before December this year."

A freeze-drying plant, according to Prasad, is two-and-a-half times more expensive than an ordinary spray-drying plant as it retains the aroma of coffee produced. In Asia, such plants exist only in Japan and Korea and in India CCL's will be the first one, he added.

"Apart from this, we have increased the capacity of our existing plant to 5,000 TPA from the earlier 3,000 TPA in 2003-04. We will be increasing it further to 6,500 TPA this fiscal," Prasad said.

"The entire expenditure is expected to be around Rs 100 crore out of which Rs 65 crore is expected to be spent this year. We are, therefore, looking at raising capital of around $15 million-$20 million through FCCBs, equity (fresh or rights) or even through loans. We will be holding an extraordinary general meeting on April 29 to deliberate on this issue," Prasad said. CCL currently has an equity base of Rs 13.30 crore.

"In 2004-05, we exported 5,800 tonnes of coffee. According to our unaudited financial results, we earned revenues of Rs 110.74 crore as compared to Rs 76.22 crore in the financial year 2004. We are looking at growing year-on-year by 30 per cent," he added.

CCL grew by 45 per cent last year. Its profit after tax increased to Rs 30.04 crore for 2004-05 as compared to Rs 19.60 crore in 2003-04, registering a growth of 53 per cent.

It has reported earnings per share of Rs 22.58 for the year ending March 31, 2005, as compared to Rs 14.74 for the financial year 2003-04.