Britain’s decision to quit the European Union and implementation of the goods and services tax (GST) regime in India will have a ‘short-term’ inflationary impact on Tata Global Beverages (TGBL), Tata Group chairman Cyrus Mistry said on Wednesday.
“The UK’s exit from the EU is expected to pose some risks in the trading and buying, which might cause an inflationary impact in some of our businesses,” Mistry told shareholders during TGBL’s 53rd annual general meeting.
Speaking about the likely impacts of the new indirect tax regime on the company’s businesses, he said GST will have an inflationary impact on the prices of tea, and this will be across the board. However, there might be a ‘short-term impact’ of the GST but the long term benefit will be ‘significant’, he added.
According to Mistry, the beverages industry has been making representations for a favourable rate as coffee and tea are widely consumed cutting across economic segments.
Global economic trends remained uncertain, which lowered growth in many markets, he said. Mistry said TGBL may “restructure” its China operations in view of the continued uncertainty of the business in that country. “The China venture is something that we will be looking at restructuring. In what way that restructuring will be done is yet to be seen. We are exploring multiple options,” the chairman said, adding the reason for the challenges was more from a production perspective.
In the developed markets, the company would continue to focus on growing green and specialty tea market share while strengthening its base business in black tea.