Tata Tea may cut prices of its branded packaged tea in India if there is a significant fall in the commodity’s price, managing director Percy Siganporia said today.
“We expect some softening in the auction tea prices towards the end of the year. If it is significant, we may not continue with just value-led strategy but may more meaningfully reflect that correction in our branded tea business,” he said.
Siganporia was speaking on the sidelines of a press conference to detail the company’s second quarter earnings. Chief financial officer L K Krishna Kumar also said the company intended to cut prices if there was a significant decline in the commodity’s prices, but added it would also depend a lot on the rupee’s movement against the dollar.
The branded packaged tea maker today reported a 168 per cent year-on-year jump in July-September consolidated net, primarily led by a foreign exchange gain of Rs 205 crore on restatement of foreign currency deposits and loans.
“The foreign exchange gain is the net impact of currency fluctuations on the value of deposits lying with Tata Tea GB Investment which contains some of the proceeds of the Glaceau stake sale,” said Sigaporia.
Net sales for the period grew 13.7 per cent to Rs 12.06 billion, of which 25-30 per cent came from the US operations (that included the sale of Tetley teas and Good Earth coffee), while the UK and India each contributed another 30-35 per cent, and the rest came from other markets.
Operating margins fell 270 basis points to 8.9 per cent because of the higher raw material prices and a rise in spends to support launch of Rooibos tea in Canada.
