Analyst Meet / AGM - Analyst Meet

30-May-2013, 02:32
The company held its Analyst Meet on 28^th May'13 and was addressed by Mr. Harish Bhat Managing Director & CEO

Key highlights

• Consolidated net sales of Tata Global Beverages (TGB) grew by 11% for FY'13, largely due to strong value growth and favorable translation gain. Strong performance was seen in South Asia, Australia and in non-branded operations.

• The company reported strong operating profits for FY'13, which was as a result of costs savings initiatives and more sales of premium category of brands that the company had created in the past.

• In India, Tea business continued to do well. Company has gained volumes and market share in India. During the year, prices were increased to offset the higher raw material costs. Management has indicated that there will not be any further price increases in near term. However a call will be taken depending upon how the raw material prices behave in future.

• Although tea prices have come down, it's too early to talk about the improvement in margin, as the prices need to stabilize and the trend needs to be confirmed. Till then, margin would be more or less steady and stable around FY'13 levels.

• Except EU and some part of Canada, most of the other international geographies namely Australia, US, Czech Republic, France have all seen good value and volume growth in FY'13.

• In South Asia, the company saw 15% topline growth, across the portfolio and maintained the market value leadership position with 22% market share. Australia saw an all round improvement in performance with both topline and bottom line performance significantly better then previous year largely due to new customers and new products like Chai latte and Specialty.

• In US, the coffee business continues to extract significant profits due to lower green coffee costs and higher premium sale of products. The K cups with Keurig, the largest coffee machine company, were well received by the customers.

• Apart from traditional coffee business, Eight O Clock is getting a strong foothold in pods and coffee machine markets, which are the new emerging markets within US for coffee business. Together with this, the introduction of new flavors of coffee will continue to drive growth in coffee business in future.

• Canada was a very challenging year, with markets in general was growing slowly. New premium products were made available in major retail chains and better marketing and distribution model was initiated. Management expects better results from this market.

• In UK, Super Premium brand-Tea pigs reported strong performance. Also TGB maintains number 2 position in green tea market. However, rest of EU saw a decline in overall tea category market. Company continued to maintain leadership in redbush and decaff tea.

• Poland strategy to turnaround continued to progress well and management expects better numbers from FY'14 onwards.

• Currently Starbucks has total of 13 stores in India managed by Tata Starbucks, the JV of the company. 7 of them are in Mumbai and rests are in Delhi. As per the management, the store profitability is robust.

• Tata Water Plus was relaunched in Mar'13 with new communications, packaging design and now in l ltr units. Tata Gluco plus launched its new flavors. Overall JV will continue to be in investments and brand building mode, however, the results will soon be evident in terms of better sales and margins.

• Overall tax rate for Q4 FY'13 was lower due to some deferred tax benefits, which were not taken earlier. While it is difficult to determine, the exact total tax rate, going forward the tax rate will be around 26-27%.

• Going forward, the management's endeavor is to continue to focus on more premium branded products and further introduce new products and look out for companies or brands for acquisitions if there are any available.

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