Backed by an increase of Rs 88 crore due to exceptional items along with lower interest costs led Tata Global Beverages to report a three-fold increase in group consolidated net profit from Rs 45 crore to Rs 161 crore for the quarter ended June 2011.
Exceptional items for the quarter included profit from the sale of non-core investments. Net sales for the quarter jumped by 6 per cent to Rs 1,455.92 crore (Rs 1,373.89 crore).
Addressing a press conference, Mr Percy Siganporia, MD, Tata Global Beverages, said, “While there has been volume growth during the quarter, the increase in profits has been primarily due to the increase in exceptional items, which was a big contributor to the increase in profits.” Exceptional items comprise selling of non-core assets in terms of shareholding in group company Tata Chemicals.
Maintaining a volume leadership in the tea category with an 18.6 per cent share, Tata Global beverages continued to take slight price increases during the quarter for its brands such as Tata Tea Premium Gold brand.
However commodity costs have continued to be high, and this has impacted its EBITA margins, which have dropped from Rs 112.50 crore to Rs 93.43 crore. “Tea prices at the auctions have been dearer by nearly Rs 10 per kilo and it is only early this month that we find prices are dipping,” said Mr Singaporia. However there is likely to be to no immediate respite from the increasing coffee prices and recovery from commodity costs in coffee may take a while, he added.
During the quarter, the company has also decided to discontinue its TiON brand of cold drink which was launched in the year 2009. “Tion did not meet the expectations and had a different vision from Nourischco (the new JV set up between the Tata's and Pepsico), said Mr Singanporia. Shares of Tata Global Beverages jumped by 3.84 per cent and closed at Rs 106.70 on Wednesday.