Intense Q3 spend dampened results a bit: Tata Global Beverages

Written by Lalitha Srinivasan | Updated: Jan 31 2014, 18:18pm hrs
Tata Global Beverages has appointed Ajoy Misra as the managing director and chief executive with effect from April 1, 2014. Misra, who now functions as managing director-designate, is optimistic about the companys performance in the next two quarters despite the challenging market environment. TGBL on Wednesday reported a 48.95% increase in consolidated net profit to R119.55 crore for the third quarter ended December 31 against R80.26 crore for the same period of the previous fiscal. In an exclusive interview with FEs Lalitha Srinivasan, Misra talks about the companys strategic plans. Excerpts:

Please comment on the companys performance in Q3 FY 2014.

We had a good 9% steady income growth this quarter over the same period of the previous fiscal. And we have a 49% growth in PAT. Overall, in terms of operative performance, India has done well. There has been a high level of advertising spend in Q3 FY14 an increase of R45 crore compared to the corresponding quarter of previous fiscal. Its an intense spend this quarter which has dampened our results a bit. If we had a normal level of ad spend in Q3, our profitability would have been higher. We are also helped by tax breaks this quarter.

Is TGBL looking for any strategic alliances or acquisitions as part of its organic growth strategy

We have a big appetite for acquisitions. We are scanning the environment for acquisitions and strategic alliances in global markets in three categories namely tea , coffee and water. Our acquisition focus on markets in Russia, the US and the Asian countries. We are quite flexible when it comes to acquisition or strategic alliances.

What is the status of Tata Tea in the branded tea markets in India

TGBL is still leading by value and volumes with 23 % and 20% value and volume market share, respectively, well ahead of our closest competition as per Nielsen data. Today, the single largest tea brand is Tata Tea Premium in the branded tea sector.

How do plan to sustain TGBLs growth momentum in the next two quarters

There has been a big increase in our A&P spend in Q3FY14, Now that s the engine of brand equity we are inventing in. We hope with our renewed focus on brand equity, we will build a long-term position for TGBLs growth.

Do you plan to increase TGBLs investments behind innovation this fiscal

Yes. Just like our investment in brand equity, innovation is going to be a key growth driver for TGBL. If you can differentiate your product in competitive markets, you can improve the companys sales for sure.

What are rural initiatives in the next two quarters.

We are increasing our rural penetration with our initiative Gaon Chalo. We plan to extend it to 18 states this year. Our rural sales are higher than our urban revenues in the range of 60:40 (rural vs urban).

Whats your export strategy for Himalayan Water

After introducing it in Singapore, we are taking it to Dubai, Abu Dhabi and other South East Asian countries this year.