Tata Coffee fell 1.96% to Rs 219.70 after the company's consolidated net profit fell 7.3% to Rs 41.97 crore on a 11% rise in net sales to Rs 656.26 crore in Q4 FY22 over Q4 FY21.
Consolidated profit before tax (PBT) jumped 8.8% to Rs 86.37 crore in Q4 March 2022 as against Rs 79.42 crore in Q4 March 2021. However, total expenses also increased by 8.65% to Rs 575.29 crore in Q4 March 2022 as compared to Rs 529.48 crore in Q4 March 2021.
On a yearly basis, consolidated net profit surged 10.32% to Rs 233.40 crore on a 4.81% rise in revenue from operations to Rs 2,363.50 crore in FY22 over FY21.
Tata Coffee's revenues from instant coffee business consisting of India and Vietnam grew by 8.7% during the quarter, driven by improved realisations despite lower exports from India consequent to delay in despatches. There has also been an improved margin driven by higher proportion of specialty / differentiated products as well as lower costs. The sales to all key markets have been robust. For the financial year, the revenues from instant coffee business grew by 20.3% with improved margins. The order book continues to be healthy both, at India and Vietnam.
The plantations segment profitability for Q4 FY22 was lower in relation to the corresponding quarter of the previous year. While coffee and pepper have shown sharply improved performance for the quarter driven by improved realisations, the company's tea operations were adversely impacted on account of lower crop due to unfavourable weather conditions. For the financial year, the profitability of coffee and pepper has nearly doubled aided by improved prices; however, the tea operations were adversely impacted due to lower crop and additionally tea prices during FY21 were at record levels. Eight O' Clock [EOC] registered robust performance during the quarter primarily driven by improved realisations.
The board has recommended a dividend of Rs 2.00 for the year ended 31 March 2022.
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Commenting on the Q4 performance, Chacko P Thomas, the managing director (MD) of Tata Coffee, said, The performance of our instant coffee business continues to be robust. There is however continuing inflationary pressure on costs. Our Plantation performance on Green Bean Coffee and Pepper during the year has also been strong, aided by improved realisations. Our Subsidiary, Eight O'Clock Coffee [EOC] has recorded improved performance during the quarter owing to better realisations and favourable channel mix.
Meanwhile, last month, Tata Consumer Products (TCPL) had announced the merger of all businesses of Tata Coffee with itself as part of a reorganisation plan in line with its strategic priority of unlocking synergies and efficiencies. The plantation business of Tata Coffee (TCL) demerged into TCPL's wholly-owned arm TCPL Beverages & Foods (TBFL). The remaining business of TCL, consisting of its extraction and branded coffee business, merged with TCPL.
The demerger was the first step and the merger happenned as the immediate second step, both being proposed through a composite scheme of arrangement. On effectiveness of the scheme, the shareholders of TCL (other than TCPL) as on the record date received an aggregate of 3 equity shares of TCPL for every 10 equity shares held by them in TCL. This was carried out through the issuance of 1 equity share of TCPL for every 22 equity shares of TCL in consideration for the demerger.
For the merger, 14 equity shares of TCPL was issued for every 55 equity shares of TCL. This enabled the consolidation and 100% ownership of the branded, extractions & plantations business of TCL into TCPL and its wholly owned subsidiary. Through this transaction, TCL shareholders got access to multiple growth engines and participation in a larger and fast growing FMCG business.
Additionally, the board of TCPL had also approved the purchase of 10.15% minority interest in its UK subsidiary, TCP UK, from Tata Enterprise (Overseas) AG, Switzerland (TEO). As consideration, TCPL issued 74,59,935 equity shares i.e. 0.80% stake (computed on post preferential issue basis) to TEO, by way of preferential issue in accordance with the applicable regulations. The above transactions, along with future reorganization, helped the organization to unlock value for both TCPL and TCL shareholders who were expecting to benefit from the resulting efficiencies and operational, administrative and financial synergies.
Tata Coffee is a subsidiary of TCPL with 57.48% of TCL's equity share capital held by TCPL. Tata Coffee holds the majority stake in the Eight O' Clock Coffee business, the 4th largest Roast & Ground coffee brand is the USA. Tata Coffee is one of the largest integrated coffee companies as well as one of the largest exporters of Instant Coffee in Asia. Its business spans from Coffee including Pepper and Tea plantations and instant coffee/ extractions business in India and Vietnam. It also has roast and ground facilities for 'Tata Coffee Grand' which is marketed by TCPL.
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