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Tata Coffee, India’s largest producer and exporter in the sector, has reported a net loss of Rs 13 crore for the second quarter of FY14, compared with a net profit of Rs 37 crore for the year-ago period. The loss is due to the write-off of $22 million (Rs 134 crore) it had invested in a US company for a new line of beverage.
“We had invested in that business nearly an year ago and felt it was not shaping the way we expected. Instead of putting up with it and waiting for it to fructify, we thought it prudent to write that off,” said Hamid Haq, managing director, Tata Coffee.
During the quarter, the consolidated revenues dipped marginally by 1.7 per cent to Rs 469 crore. Haq added besides the write-off, the fundamentals of the business in the instant coffee segment was robust and with prices stabilising, there should be healthy growth going forward.
Tata Coffee’s performance has been on a good upswing over the past few quarters thanks to the rising demand for instant soluble coffee. Plus, Tata Coffee has secured a long-term contract to supply coffee beans to Starbucks for its Indian operations.
"The volumes to Starbucks has been picking up with 27 stores so far in India. We are working with Starbucks to explore how we can be part of their supply chain for the Asia-Pacific region as well," Haq added.
The news of Tata Coffee reporting a shocking loss culled its share price by a good 6.7 per cent on the National Stock Exchange on Thursday, with the scrip closing at Rs 1,054.75 apiece.
