Informist, Tuesday, Jul 30, 2024

By Avishek Rakshit

KOLKATA – Costs related to business restructuring and increasing losses from its tea plantation business in Assam led Tata Consumer Products Ltd to report an 8.3% year-on-year decline in its consolidated net profit to 2.9 bln rupees in Apr-Jun. The company's net profit for the quarter missed the Street’s estimate of 3.7 bln rupees by a wide margin.

The revenue of the country’s second-largest tea retailer grew 16.3% year-on-year 43.5 bln rupees in Apr-Jun, compared with the Street’s estimate of 43.7 bln rupees. Sequentially, the company's net profit was up 34.0% and revenue rose 10.8%.

Although the revenue growth was mostly in line with the Street’s projections, losses from Amalgamated Plantations Pvt Ltd, where Tata Consumer has a 41% stake, increased to 249.0 mln rupees from 208.6 mln rupees in the year-ago period.

Also, the business restructuring cost due to the merger of Tata Coffee Ltd with Tata Consumer increased to 171.0 mln rupees from 51.6 mln rupees in the year-ago period. These losses and cost overheads directly had a bearing on the company’s profit growth.

The company's consolidated earnings before interest, tax, depreciation, and amortisation grew 23% on year to 6.7 bln rupees during the quarter compared with the Street’s projection of 6.9 bln rupees.

During the June quarter, the revenue from its beverages business in India grew 6% on year as the category was impacted by an intense summer, the company said in a statement. Revenues from the coffee business, however, grew 28% on year.

The Nourishco brand of ready-to-drink products recorded revenue growth of 7% during the quarter. The growth was muted on account of a high base and intense summer impacting out-of-home consumption, the company said.

For the quarter, revenues from its foods business in India grew 30% and revenue from the salt business grew 9% on year, driven by strong volume growth. The value-added salt portfolio, priced at a premium, grew by 35% during the quarter, while Tata Sampann branded portfolio of edible products grew 37% on year.

“In India, we continue to strengthen our sales and distribution infrastructure and have implemented split routes as announced earlier, this is expected to add about 35?ditional feet on street,” Sunil D’Souza, the company’s managing director and chief executive officer said. “Channels of the future (modern trade and e-commerce) continue to be strong contributors to our growth algorithm. In addition, we are piloting our go-to-market in the pharma channel (for our health & wellness portfolio) and in the food service channel.”

During the quarter, revenues from international business grew 10% and profitability from global operations improved significantly led by structural interventions and pricing actions, the company said.

Tata Starbucks, the 50:50 joint venture with US-based Starbucks Corp, added 17 new stores during the quarter and entered four new cities. Currently, Tata Starbucks has 438 stores across 65 cities in the country.

Shares of Tata Consumer Products closed 0.5% down at 1,194.9 rupees on the National Stock Exchange.

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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