Tata Consumer domestic business to see high growth: Chandrasekaran

Tata Consumer Products Ltd. (TCPL) will see high growth in the domestic market, according to Chairman N. Chandrasekaran, who also expressed the company’s openness to acquisitions and expanding into new categories.

India’s business growth would continue to outpace that of the international market, with the percentage of revenue from the Indian market expected to increase, Mr. Chandrasekaran said replying to shareholders at the 60th AGM.

India business has a higher margin, especially the branded businesses at around 14% and international business at 11%, the executive said.

“Currently, we’re expanding both the beverages and food businesses. So, there’s a lot of focus on these businesses, we got to scale them. And also we are investing in R&D and innovation. We are looking at new categories and looking at acquisition opportunities,” he said.

Last year, TCPL successfully launched 34 products. Currently, TCPL’s branded tea contributes 47% to the total revenue, primarily driven by the Indian market, while coffee contributes 11% and is dominated by the international business.

To drive growth, the company has allocated ₹400 crore for capital expenditure.

Mr. Chandrasekaran, who also serves as the chairman of Tata Sons, highlighted that the company’s subsidiary, NurishCo Beverages, aims at crossing ₹1,000 crore revenue in current fiscal compared with ₹645 crore in FY23.

He further emphasized TCPL’s focus on the South Indian market, where they are implementing localised strategies to improve distribution, adapt advertisement campaigns, and customize products to cater to southern tastes.

He expressed optimism about millets in the company’s food portfolio, noting its potential despite its current small share.

In international markets, TCPL aims to strengthen its portfolio by expanding its non-black tea business, increasing its presence in the coffee market, and introducing ethnic ready-to-eat and ready-to-cook products.

Mr. Chandrasekaran also mentioned the growth and expansion plans for Starbucks, TCPL’s joint venture coffee chain, which currently operates in 41 cities. In the past year, the chain opened the highest number of stores (71).

About the corporate structure, the company is continuing its simplification journey, and the merger between Tata Coffee and TCPL is expected to be completed this year.

Last year, the company announced its intention to merge all of Tata Coffee’s businesses as part of a reorganization plan aimed at unlocking synergies and efficiencies.

According to the scheme that was announced, Tata Coffee’s plantation business (TCL) will be demerged into TCPL’s wholly-owned subsidiary, TCPL Beverages & Foods (TBFL).

The remaining business of Tata Coffee, comprising its extraction and branded coffee business, will be merged with TCPL. The merger is anticipated to generate synergies that will drive high single-digit growth for the coffee business.

TCPL’s CEO and Managing Director Sunil D’Souza stated that the consolidation of the legal structure will continue to enhance efficiencies and reduce the number of entities from 45 to approximately 25.

The merger of Tata Coffee is in its final stages. In this journey, the company is taking corrective measures in various markets, including consolidating and winding up operations in small and insignificant markets. The company has operations in Australia, Czech Republic, South Africa and Bangladesh.