Analyst Meet / AGM - Analyst Meet

02-Aug-2013, 05:33
Tata Global Beverages held its Analyst meet on 1^st Aug'13 and was addressed by Mr Harish Bhat, MD and CEO

Key highlights

• Net sales of TGB for June'13 quarter grew by 5%, most of which was a value growth. Rupee depreciation did not have any major effect for the company, however, the same will benefit in coming quarters.

• South Asia, Canada and Australia performed well in the quarter.

• Margin expansion in Q1 FY'14 was predominately due to costs savings and control measures taken by the management in the past.

• India continued to grow strongly in terms of value and volume both for tea and coffee business. There was a 18% top line growth across the portfolio in South Asian market for the company mainly due to value increases. Company maintained its market share and value share leadership with 20.2% and 21.9% share respectively within the overall South Asia market.

• Costs of tea leaves continue to remain firm overall, while it softened a bit for normal teas leaves used for preparing normal teas.

• USA market continued to do well, with Eight O Clock continue to grow in volumes and value. The company also got some benefits for lower green coffee costs. Marketing efforts were increased further to expand the reach of the company.

• Management expects coffee prices to remain stable in FY'14, after significant rise in FY'13.

• Australia market show all round growth both from existing and new product launches. The company was able to increase its market share and reach in the country. In Canada, the company got the breakthrough to serve black tea in hospitals, which is a huge market in that country. Tea continue to do well in UK as well.

• However in EMEA region, which is the emerging markets, Middle East and African region, the tea category declined in higher single digit. This came as a surprise to the market, where overall market shrunk compared to last year.

• JV with Starbucks expanded to 18 stores and as per the management, the profitability of every store is robust. 9 stores each are in Mumbai and Delhi. However, not many details were revealed during the meet. More than 90% of the coffee requirement of Starbucks is supplied by Tata Coffee.

• The water business saw robust growth in Q1 FY'14 and volumes were in strong double digit. However, will take nearly 18 months more time to breakeven the business.

• As per the management, the company is looking out for inorganic growth and balance sheet size of the company is sufficient to take care of any such opportunities.

• During the month of July 2013, the Company has entered into an agreement with Tata Realty and Infrastructure for the development of the Company's property in Bangalore through a Special Purpose Vehicle (SPV). The consideration for the transfer of the Company's property is Rs. 195 crores which will be discharged by a mix of cash, securities in the SPV and constructed space in the developed property. The necessary transaction documents have been executed by the parties in this regard.

• Overall, the company's long term strategy is to remain focused on profitability, continue to invest in brands and cost optimization.

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