Tata Global Beverages has reported a 10.94 per cent drop in group consolidated net profit at Rs 64.06 crore (Rs 71.93 crore) for the third quarter ended December 31. However, there was a marginal 2.1 per cent increase in profit after tax from Rs 79.78 crore to Rs 81.51 crore. Net sales were up by 11.9 per cent from Rs 1,602.42 crore to Rs 1793.20 crore.
At a press conference, Mr Percy Siganporia, Managing Director, Tata Global Beverages, said, “Commodity costs continue to harden and it has been a volatile exchange rate market. We have adopted cost saving measures and have appointed the services of AT Kearney to manage costs.”
During the quarter, input costs (consumption of raw material) increased from Rs 615.86 crore to Rs 698.29 crore. The company also spent heavily on advertising and promotions by increasing spend from Rs 278.59 crore to Rs 340.62 crore.
However, the company's consolidated total operating income was up by 12 per cent at Rs 1,801.82 crore (Rs 1,605.96 crore) due to price increases and underlying performance in tea in some markets.
The group's profit after interest but before exceptional items was at Rs 156 crore (Rs 147 crore) due to improved operating performance and lower interest costs which partially offset the impact of commodity cost increases. “The exceptional items have been cost related as we have been spending on product development and long term initiatives like our joint venture formation with other companies,” added Mr Siganporia.
Meanwhile, Mr Siganporia stated that his company would continue to look for acquisitions in the US and Russian markets. Currently, nearly 65 per cent of the company's turnover comes from the overseas market and it holds leadership position in tea in Canada (50 per cent share) and is the number two player in the UK (after Unilever).
In the Indian market, it holds a volume share of 21.3 per cent and value share of 19.5, according to the Nielsen company.