Tata Global Beverages to tap India’s consumer base
Around 40 per cent of the company’s revenue comes from the international market
- Published 12.06.19, 1:05 AM
- Updated 12.06.19, 1:05 AM
- 2 mins read
Tata Global Beverages Ltd, the consumer facing company from the Tata stable, will sharpen its focus on India even as it plans to consolidate its overseas business and exit marginal markets to bring back growth momentum and scale.
“We want to build a high class premier consumer products company, leveraging the large consumer base we have in India and that’s the goal we are working towards,” Natarajan Chandrasekaran, chairman of TGBL and Tata Group, said.
Speaking at the AGM of the shareholders of Tata Global in Calcutta, he listed three challenges before the company.
Around 40 per cent of the company’s revenue come from the international market where the growth is slow.
TGBL continues to depend on tea as all the other businesses such as water are small in terms of revenue and profit contribution. Hence, the company would need a wide range of products to attain the scale of a large FMCG company.
Moreover, the company suffers from low returns on equity . While revenues last year grew 6 per cent, profit after tax was down 18 per cent on a consolidated basis.
TGBL intends to gain scale and focus more on the Indian market. It announced the merger of the food business of Tata Chemicals with TGBL to create a broader consumer product company.
However, TGBL is not targeting India as a single market but as a combination of multiple markets with custom-made product for different taste buds.
While the India business grew 9 per cent by volume, it declined in terms of value. Tea continues to be a large contributor apart from coffee and water. With black tea consumption on the wane, there is pressure on the business.
Globally, it has a strong presence in three markets — the UK, the US and Canada. While Tetley is big in the UK and Canada, 8’O Clock coffee is going strong in the US.
In response to a shareholder’s query, Chandra provided a glimpse of the global strategy. “Consolidation has to happen. We reduced three subsidiaries this year in the UK. We will be reducing the number of subsidiaries, some markets we will exit,” he said, adding that TGBL has already exited Russia and China.
He said TGBL, to be rebranded Tata Consumer Products Ltd, will expand outside of food and beverages. It has started a pilot project to market detergents.
He also informed the shareholders that Indian Hotels will open speciality restaurants across the country.