Tata Global Beverages, which sells tea brands like Tata Tea and Tetley, today posted 6.55 per cent decline in consolidated net profit at Rs 133.60 crore in the June quarter, on the back of certain exceptional items including some restructuring cost.
The company had reported a net profit of Rs 142.97 crore in the year-ago period, it said in a release.
"Profit after tax is lower because of exceptional items. In the previous we had profit from our exit in the China venture. In the current year we have restructuring and redundancy cost," Tata Global Beverages chief financial officer L Krishnakumar told PTI.
"We have changed the organisation structure and moved more activities to India, in terms of back office and technology related work. It is a one-time cost which would spread over the next one year; so that is creating an adverse impact on PAT line," he added.
The company has shown a loss of Rs 18.18 crore in exceptional items during the reporting quarter.
Its total income rose to Rs 1,831.11 crore, compared with Rs 1,718.76 crore in the year-ago period.
The firm's sales growth stood at 6 per cent in the quarter, according to Krishnakumar.
"Tata Coffee turnover was lower, which is affecting the growth rate, but notwithstanding that the sales growth has been much higher than what we have achieved in the recent past," he said, adding, "We are seeing an improving trend in sale and expect its growth to be better going forward."
The revenue from branded business increased by 7 per cent year-on-year in the reporting quarter, and after excluding the impact of business restructuring and at constant currency, the increase is 8 per cent, Krishnakumar said, adding, "However, non-branded sales were lower than the corresponding quarter of previous year."
Its total expenses were at Rs 1,595.88 crore, against Rs 1,500.36 crore, up 6.36 per cent.
Revenue from the tea segment was up 5.51 per cent at Rs 1,314.31 crore, compared with Rs 1,245.66 crore last year, while earnings from the coffee segment rose 16.73 per cent at Rs 291.66 crore, from Rs 249.85 crore.
On the capex for FY19, Krishnakumar said, "In terms of normal capex, we spend around Rs 140-150 crore a year on a consolidated basis for all markets. So, we expect to be in that line."
"In addition, we are hoping to commission the Vietnam project for Tata Coffee, which is a capex of Rs 300-350 crore. That should come on line around the end of the financial year," he added.
In India, which contributes 45 per cent of business, it had a good volume growth of 8 per cent during the first quarter and the company expects to clock a volume growth of 10-12 per cent in the next quarter.
Asked if the company would be looking to merge with the salt and lentils business of Tata Chemicals, while also entering the dairy business, as per media reports, he said, "Any restructuring is speculation at this point in time."
"We are looking at entry into new categories and I am not commenting on it. Hopefully during the course of year we will make announcement. But yes, the intention is to broaden our portfolio," he added.
Krishnakumar said the company will also be looking at more opportunities in the health and wellness space and will be launching more products in this category, similar to its Chakra Gold Active Plus which is a combination of kokum and amla with regional teas.
Tata Global Beverages, which has launched Tetley Cold Infusions and Super Squash in the UK market, said it would look at launching these products in India as well over a period of time.
On the exit from China, Russia and Sri Lanka he said, "It has helped to improve profitability but has had an impact on the topline till we catch up the turnover through other growth measure."
The company's share closed 4.49 per cent lower at Rs 235.90 apiece on the BSE today, against 0.23 per cent decrease in the benchmark.
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