In Q4FY 12, Tata Global Beverages has reported 36% dip in the Net profit at Rs 54.21 crore despite 11% increase in the total income from operations at Rs 1734.10 crore; mainly on the back of EO expenses. Operating margins improved on tea business margins. The company has incurred EO expenses of Rs 39.50 crore against income of Rs 55.94 crore in the corresponding previous year which pulled down the profitability.

In India and Canada, the company has retained volume and value leadership due to a realignment of the marketing mix focusing on distribution as well as investment in brands. New Chai blends - dark chocolate and vanilla bean, perk high caffeine orange pekoe and green pomegranate tea launched earlier in Canada are gaining distribution. Tetley Chai Latte - an exciting product combining both coffee and tea has done very well in Australia and Tetly red bush continues to be a market leader in Great Britain. The company has announced a joint venture with Starbucks to open Starbucks cafes across India. Nourish Co - the company's JV launched Tata Gluco Plus - a glucose based lemon flavored drink well received in India.

Quarterly Performance

For the quarter ended March 12, the company has posted 11% increase in the consolidated total income from operations at Rs 1734.10 crore, reflecting the improved performance in most major markets coupled with favorable foreign exchange translation impact. The revenue growth was modest owing to marginal 7% increase in revenues from tea business at Rs 1276.04 crore while revenues from coffee and other products grew 20% to Rs 432.03 crore. Revenues from tea business constituted bulk share of 74% while that of from coffee and other products constituted 25% of the total revenues.

At segment front, tea business margins improved 260 bps to 13.3% while that of coffee and other products margins declined sharply 370 bps to 11.9%. On the other hand, the company has managed to lower all the expenses heads but for the staff cost and other expenses. The raw material as % of sales net of stock adjustment declined 280 bps to 44.1% power and fuel cost declined 160 bps to 15.3%. On the contrary, staff cost inched up 190 bps and other expenses increased 140 bps to 15%.

Improvement in the tea business margins have powered OPM 70 bps to 10.8% in the quarter under review. The other income declined 17% to Rs 18.92 crore and led PBIDTA up 14% to Rs 206.09 crore. Interest cost declined 58% to Rs 14.25 crore while depreciation declined 2% to Rs 25.24 crore there by leading PBT before EO higher by 38% to Rs 166.60 crore. At the segment level, the tea business posted healthy 34% increase in the profit at Rs 169.38 crore. However, the coffee and other products business reported marginal 8% fall to Rs 51.50 crore and other business reported loss of Rs 5.88 crore.

The company has reported EO loss of Rs 39.50 crore in quarter under review against Rs 55.94 crore income in the corresponding previous year. Among the expenses; major expenses are Rs 10 crore for long term initiatives and new projects and Rs 13 crore of loss on assets relating to discontinued business initiatives and Rs 6 crore of new product development cost. In the corresponding previous year, the company has profit on sale of non core investments at Rs 44 crore and Rs 37 crore of actuarial gain on defined benefit pension scheme of an overseas subsidiary there by resulting in to profits.

With EO expenses, PBT tumbled 28% to Rs 127.10 crore. The Taxation declined 55% to Rs 28.95 crore and led PAT down 13% to Rs 98.15 crore. After accounting 82% increase in losses from associates at R s19.74 crore and 43% decline in Minority interest income of Rs 24.20 crore, Net Profit was down 36% to Rs 54.21 crore.

Yearly Performance

For the year ended March 12, the company has reported 10% increase in the consolidated total income from operations at Rs 6631.116 crore and 40% increase in Net Profit at Rs 356.14 crore. Despite 70 bps dip in OPM to 9.4%, PBT before EO was higher by 14%, thanks to lower finance cost and depreciation. EO income has more than doubled to Rs 22.54 crore while taxation declined 30% to Rs 141.71 crore. Thus Net Profit was higher by 40% to Rs 356.14 crore.

Other Information

• The Board of Directors has recommended a dividend payment of Rs. 2.15 per share (Face value Re. 1 each) for the year ended 31st March 2012.
• Pursuant to acquisitions of further equity shares of Mount Everest Mineral Water Limited, the current shareholding of the Company in Mount Everest Mineral Water Limited is 50.07%.

Tata Global Beverages: Consolidated Financial Results

Tata Global Beverages: Segment Results