Companies

Tata Global to take hard look at unprofitable markets

Our Bureau Kolkata | Updated on January 09, 2018

Ajoy K Misra, Managing Director and CEO, TGBL, at a press briefing in Kolkata on Thursday. - Debasish Bhaduri

Ajoy K Misra, Managing Director and CEO, TGBL (file pic)

To re-evaluate businesses in Czech Republic, Poland, if losses continue

Tata Global Beverages Ltd (TGBL) is looking to “re-evaluate and rationalise” its unprofitable businesses.

The move comes after the company exited two unprofitable ventures – its consumer tea business in Russia and the B2B tea business in China.

According to Ajoy K Misra, Managing Director and CEO, the company will take a “close hard look” at its businesses in Poland and Czech Republic in eastern Europe.

“As a part of our strategy, we constantly re-look our businesses with a view to rationalise it,” Misra told reporters. He, however, did not clearly mention whether the company will exit Poland and Czech Republic, if losses continue.

Eastern Europe scenario

In fact, TGBL’s businesses in the “mature European markets” have been facing challenge with consumption not growing and margins coming under pressure.

The company’s Poland business (Tata Global Beverages Polska) has been in losses for quite some time now. Poland is the second largest tea market in eastern Europe after Russia.

The Polish subsidiary as per the company’s annual reports have been in red for FY-17 reporting a net loss of ₹8 crore.

In FY-16, it reported a loss of ₹13.50 crore.

In FY-15, losses were to the tune of ₹16 crore, while in FY-14 losses stood at ₹14 crore.

TGBL, some 12 months back, has already taken up a restructuring exercise and pumped in investments expecting a turnaround.

In Czech Republic too, Tata Global Beverages Czech Republic a.s. has been facing losses for the last two fiscal.

From a ₹6-crore profit in FY-15, it reported a loss of ₹6.50 crore in FY-16 and narrowed it down to ₹5 crore in FY-17.

“The markets in Europe are no longer what it used to be. There has been consolidation happening in these markets,” Misra said, maintaining that the company has changed its distribution and go-to-market businesses in Poland where it hopes to be profitable soon.

New markets

While the company was not in a hurry to exit and would prefer making its investments work, however, it would not allow “prolonged pulling down” of its financials, he pointed out.

Incidentally, TGBL is looking at newer markets to de-risk its portfolio.

It is pushing a portfolio of green tea, under the “Tetley Super” brand in the UK market, where consumption of black tea as a category has come under pressure.

“We were highly indexed there with black tea. But, we put in place a strategy which helped rejuvenate the market. We changed our mix in the last three years,” he said.

Premiumisation

TGBL, Misra said, would go in for premiumisation of its products.

While Tetley Super Green Tea and Tata Tea Veda is positioned for the premium segment in India, its indulgence flavour blends in the UK and Signature range in France are both targeted at the premium segment.

“While we continue to be present in the mass market, you will see more premiumisation by TGBL,” he said.











Published on August 17, 2017

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

null
This article is closed for comments.
Please Email the Editor

You May Also Like