Tata Consumer: Integrating business levers

Tata Consumer Product (TCP), formerly Tata Global Beverages, a non-alcoholic beverages maker, has decided to focus on integrating businesses, sales and distribution activity in order to help creat growth levers as well as to achieve cost synergies.

The Tata Group company is harping on new brand promise to do better for all stakeholders.
India’s fast moving consumer goods (FMCG) market pegged at Rs 30 lakh crore has a huge potential, especially in the kitchen or food on the go segment. Exports opportunities are also available, particularly with the expatriates.
As far as financials are concerned, Tata Consumer took some blow from recent merger of Tata Chemical’s food division with itself, which saw amortisation expense to Rs 40 crore. Apart from the usual capital expenditure of Rs 150 crore, there is no other plan to hit the balance sheet.

For the fiscal fourth quarter to March 2020, Tata Consumer’s performance was marginally affected by Covid-19. It has reported a net loss of Rs 122.48 crore as against a net profit of Rs 35.99 crore a year ago.
Net sales rose 35% to Rs 2,405.03 crore during the quarter under review, as against Rs 1,775.46 crore in the year ago period.

On like to like basis, 4Q revenue show an increase of 6% and 4% for FY20.
All business segments, India beverage, International beverage, India Foods and Tata Coffee have clocked growth.
Margins too have expanded substantially. Earnings before interest, tax, depreciation, adjustment (EBITDA) margin grew by 200 basis point while profit before tax (PBT) margin widened by 65bp.
Tata Consumer expects beverage margin to improve next year. Very near term the margin expansion may be uncertain because of market conditions but it is confident of achieving Rs 120-150 crore synergies in 18 months due to merger of Tata Chem’s food business.
Tata Consumer is currently among top 10 F&B companies in India.

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