Tata Coffee expects demand to slow down amid Covid-19; Hopes for recovery as lockdown eases

Tata Coffee explains that its business is heavily export-dependent.

Jun 04, 2020 03:06 IST India Infoline News Service

Tata Cofee
The Tata Group-backed Tata Coffee on Thursday said the outbreak of COVID-19 pandemic and the restrictions imposed by various governments across the globe could slow down global coffee consumption in the immediate future.

In a detailed statement, Tata Coffee explains that its business is heavily export-dependent. Thereby, some of the key markets for the company that are affected by COVID crisis include Russia and Western Europe.

"The impact on the business of the Company due to the situation created by Covid-19 in the key markets hold some uncertainties for the immediate future, especially with regard to 'Out of Home' consumption demand and normalcy of ports and other operations in different markets which could impact the level of customer orders," adds the company.

Tata Coffee has resumed operations fully in both the Instant Coffee Plants in India and other locations including Plantations with necessary safety precautions for our employees.

With lockdown measures eased, the company says, it has fulfilled its obligations and delivered the orders scheduled for April and May till date, both in Instant Coffee and Plantations operations, and do not see any major impact, going forward in this regard.

Moreover, Tata Coffee's liquidity position continues to be healthy because of adequate cash and liquid investments. Further, it is in position to service its debts as they fall due and also has sufficient undrawn lines of credit.

As part of its strategy, Tata Coffee says, "the Company continues to drive cost optimization initiatives across various operations."

While the company is adversely impacted by the current price environment, however, Tata Coffee also believes that the healthy product portfolio and the ability to cater to its customers with its niche and differentiated premium products safeguards the Company to a significant extent. The company has robust internal controls and do not see any impact on the same due to COVID-19.

Overall, Tata Coffee's board and management are optimistic of demand gradually coming back to normal levels with the countries which are under lockdown gradually lifting restrictions.

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