Concall Summary: Tata Consumer Products Limited Q4FY20

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Business updates

  •  The idea behind merger was to create a large consumer business by merging both companies and then make a foray into ancillary FMCG business
  • There is a dedicated team working on four key pillars
    • Looking at synergies
    • Creating a sales & distribution structure
    • How to leverage synergies and make it flow to the bottom line
    • Treading the right growth levers as we scale for growth
  • Currently operating in the kitchen category and looking at becoming a formidable player in all the aspects of the foods business
  • The FMCG market has been subdued because of declining household expenditure and since March effect of COVID is also visible
  • Have opened around 30 outlets of Starbucks recently with experimentation around different forms of delivery
  • In Assam, the tea plantations have started with 100% labor and in Bengal with 50%
  • In foods business volume grew 3% and revenue grew by 12%
  • The revenue growth in Starbucks JV was around 22%
  • The India beverages business is expected to perform better in terms of profitability going forward
  • No major COVID issues in Vietnam plant of Tata Coffee
Also Read on FinMedium:  Concall Summary: V-Guard Q4FY20

Participants

  • IIFL
  • ICICI Securities
  • Maybank
  • ICICI Prudential Asset Management
  • Kredent Capital
  • Goldman Sachs
  • Reliance General Insurance
  • Mirae AMC
  • JP Morgan
  • Motilal Oswal
  • Investec

QnA

  • Currently, the focus is more on keeping plants running and as soon as we reopen get capacity utilization at optimal levels
  • Currently, Tata Sampann is into pulses and spices and work is going on defining what all products will come under that umbrella
  • The management is working hard to leverage consumer behavior and adapting it into products that will be launched under the Sampann brand
  • There have been supply chain issues with Tata Salt because delivery from the plant is sent in bulk and in the C&F zones where there was a lockdown there had been problems, but that has now been cleared
  • Will look at organic as well as inorganic opportunities to grow
  • Looking at getting the efficiency ratios upwards and moving up on the value chain as we go forward
  • Have joined the company because Tata Group is willing to put resources behind the company to drive growth going forward
  • The impairment taken in the international business is not on account of the branded business that is doing very well and has seen good demand but because of foodservice B2B business
  • Doing a bit of restructuring on the rental agreement for Starbucks and owners have been cooperative on that front
  • Divestment of further business in various geographies could take place when the management sees a business not doing well
  • Will be looking at multiple newer products in the beverage product portfolio and the R&D team is working on newer products
  • The overall CAPEX in normal parlance is around Rs 150 crores
  • Taking a closer look at how the company is looking at organizing itself and what could be the strategy with regards to some part of the B2B business
  • The overall idea is to generate higher returns from the capital that has been already invested in the business but could look at cash outlay by the end of the year
  • In the global business, numbers have been good because consumption of in house products have actually gone up
  • Looking at value-added in the consumer product portfolio to differentiate from the competition
Also Read on FinMedium:  Concall Summary: Bandhan Bank Q4FY20 & Q1FY21

Image Source: Company’s LinkedIn Profile

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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