Finance

Tata Consumer looking at both organic, inorganic growth opportunities: Chairman


Tata Consumer Products (TCPL), the food & beverage arm of the Tata Group, is looking at both organic and inorganic growth opportunities, and has aspirations to enter new categories. The company is focused on expanding distribution networks and product portfolio, although high inflation is likely to impact demand across categories.

“The company is on a growth path. It is better for the company to focus on leveraging the product portfolio and expanding the distribution, and continue to innovate in product portfolio and enter new categories. We will support both organic and inorganic growth opportunities,” TCPL chairman N Chandrasekaran told shareholders during the company’s 59th annual general meeting on Monday.

Chandrasekaran said there will be a lot of focus on the domestic market, while in the international market the focus would be on the US, Canada and the UK. The company will rationalise its presence in all other markets. “The company has aspirations to expand into other categories apart from beverages and foods,” he emphasised, adding inorganic expansion is one of the “key” strategies for the company and the cash in the company would be used “definitely” for the right inorganic growth opportunities. He, however, said the company is not going to enter the businesses of atta and rice.

The chairman said as the company works towards achieving the long-term vision, the current operating environment remains highly volatile. Geopolitical tensions, supply-chain challenges and demand-supply mismatches in crude and several other commodities are driving inflation, which will likely impact demand across categories. “In this uncertain environment, we will continue to focus on strong execution, maintain agility and nimbleness and products to navigate though sort-term bumps. And, more importantly, to take advantages of the opportunities that could arise during this period,” he pointed out.

For the current financial year, the company plans around `361-crore capital expenditure. Last fiscal, the capital expenditure stood at around `250 crore.

The company has recently announced a “re-organisation plan” to combine Tata Coffee’s business into it, as this exercise is expected to bring similar businesses in the two companies together, create dedicated verticals to drive focus and result in revenue synergies and operational efficiencies.

“For the Tata Coffee integration, completion of the NCLT and other processes are expected to take 9-12 months. We expect the synergy to be in the upper single digits in terms of PAT… Already we are seeing a synergy of more than `100 crore on the cost base on a sustainable basis,” Chandrasekaran told the shareholders.

The company’s domestic business grew 13% last fiscal and it recorded market share gains in both the core categories of tea and salt. “Our growth businesses — NourishCo, Tata Sampann, Tata Soulfull and Tata Q — collectively grew 52% during the year (FY22) and we are investing in these businesses to fuel them for growth further,” the chairman said. Himalayan, the natural mineral water brand, has broken even on the EBIT level for the first time, and the Tata Starbucks business was also EBITDA-positive for the last quarter.

“Our international business saw modest growth on the back of double-digit growth last year. Our coffee business in the US is seeing stable market share and we are following a three-brand strategy in tea for international markets with Tetley, Good Earth and Teapigs,” the chairman said.

Tata Consumer Products MD & CEO Sunil D’Souza said the company has been focusing on six priorities — strengthening and accelerating core, driving digital and innovation, unlocking synergies and focusing on costs, creating a future-ready organisation, exploring new opportunities and embedding sustainability. “In FY22, we closed at 1.3 million outlets directly. We are targeting to go to 1.5 million outlets. It is not that we are adding 0.2 million, we will add much more as we focus on wholesale and indirect reach,” D’Souza added.


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