Mumbai, Oct 28: Tata Group's beverages arm Tata Global Beverages, which sells tea brands like Tata Tea and Tetley, today said, its consolidated profit soared 93.9 per cent to Rs 78.29 crore on the back of increased sales, restructuring of high cost debts, and lower operating costs.
“The increase in profit is higher than the corresponding increase in sales. The restructuring of some of our high cost debts, lower operating costs as well as reduced advertising expenditure have also helped in better profit realisation,” Tata Global Beverages Chief Financial Officer L Krishnakumar said here today.
During the period under review, the company's sales rose to Rs 1,612.03 crore, an 11.32 per cent growth, as against Rs 1,448.10 crore in the corresponding period a year ago.
“Price increases, triggered at the end of June and July, have enabled the margin build-up during the quarter. We have an excellent performance in the country with volume and profitability growth. And this has been the driver of bottomline growth. We have achieved value market leadership in this quarter, something, we had failed to do in decades,” Managing Director Percy Siganporia said.
Siganporia pointed out that had it not been for the marginal forex losses due to steep fall in the rupee, profits would have been still higher.
“The net impact of the forex losses was marginal. The US dollar strengthened against the rupee towards the end of the quarter. There was an impact in terms of currency translation. The net impact was about Rs 7 crore,” Krishnakumar said.
Over 70 per cent of the company's business comes from outside the country, with exposure to dollar and pound sterling and the Russian rouble.
On the overseas business, Siganporia said, “There was strong performance in specialty teas. We have market leadership in green teas and Redbush in Britain. We had good performance in Russia, almost 15-20 per cent growth in coffee business. Our tea performance was a little slack, but coffee has compensated for it. Two big areas, which have impacted the topline—Australia to the extent of Rs 9-10 crore and the US coffee. The growth numbers are positive after these negative impacts.”
In Canada, the higher commodity costs and merchandising eroded margins, he added.
On it's US brand Eight O' Clock Coffee, he said, “We have plans to build up the volume and wait for commodity volumes to ease off and the margins will then start rolling in.”
The company had formed a joint venture with the Zhejiang Tea Group of China for setting up a green tea extracts and polyphenol extraction unit in that country, and has already shipped the first container.
He parried a question on the company's relationship with Starbucks, saying “I cannot comment on speculation.”