Tata Global Beverages posts 6.55 percent decline in net profit at Rs 133.60 crore
The company has shown a loss of Rs 18.18 crore in exceptional items during the reporting quarter. Its total income rose to Rs 1,831.11 crore, compared with Rs 1,718.76 crore in the year-ago period.
Tata Global Beverages, which sells tea brands like Tata Tea and Tetley, today posted 6.55 percent decline in consolidated net profit at Rs 133.60 crore in the June quarter, on the back of certain exceptional items including some restructuring cost. The company had reported a net profit of Rs 142.97 crore in the year-ago period, it said in a release.
"Profit after tax is lower because of exceptional items. In the previous, we had profited from our exit in the China venture. In the current year we have restructuring and redundancy cost," Tata Global Beverages chief financial officer L Krishnakumar told PTI.
"We have changed the organization structure and moved more activities to India, in terms of back office and technology related work. It is a one-time cost which would spread over the next one year; so that is creating an adverse impact on PAT line," he added.
The firm's sales growth stood at 6 percent in the quarter, according to Krishnakumar. "Tata Coffee turnover was lower, which is affecting the growth rate, but notwithstanding that the sales growth has been much higher than what we have achieved in the recent past," he said, adding, "We are seeing an improving trend in the sale and expect its growth to be better going forward."
The revenue from branded business increased by 7 percent year-on-year in the reporting quarter, and after excluding the impact of business restructuring and at constant currency, the increase is 8 percent, Krishnakumar said, adding, "However, non-branded sales were lower than the corresponding quarter of previous year."
Its total expenses were at Rs 1,595.88 crore, against Rs 1,500.36 crore, up 6.36 percent. Revenue from the tea segment was up 5.51 percent at Rs 1,314.31 crore, compared with Rs 1,245.66 crore last year, while earnings from the coffee segment rose 16.73 percent at Rs 291.66 crore, from Rs 249.85 crore.
On the capex for FY19, Krishnakumar said, "In terms of normal capex, we spend around Rs 140-150 crore a year on a consolidated basis for all markets. So, we expect to be in that line." "In addition, we are hoping to commission the Vietnam project for Tata Coffee, which is a capex of Rs 300-350 crore. That should come online around the end of the financial year," he added. In India, which contributes 45 percent of the business, it had a good volume growth of 8 percent during the first quarter and the company expects to clock a volume growth of 10-12 percent in the next quarter.
Asked if the company would be looking to merge with the salt and lentils business of Tata Chemicals, while also entering the dairy business, as per media reports, he said, "Any restructuring is speculation at this point in time." "We are looking at entry into new categories and I am not commenting on it.
Hopefully, during the course of the year, we will make the announcement. But yes, the intention is to broaden our portfolio," he added. Krishnakumar said the company will also be looking at more opportunities in the health and wellness space and will be launching more products in this category, similar to its Chakra Gold Active Plus which is a combination of kokum and amla with regional teas.
Tata Global Beverages, which has launched Tetley Cold Infusions and Super Squash in the UK market, said it would look at launching these products in India as well over a period of time. On the exit from China, Russia, and Sri Lanka he said, "It has helped to improve profitability but has had an impact on the top line till we catch up the turnover through another growth measure."
The company's share closed 4.49 percent lower at Rs 235.90 apiece on the BSE today, against 0.23 percent decrease in the benchmark.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)