Speaking to analysts after the company’s first-quarter results on Friday, D’Souza said margin expansion would be driven by the full impact of recent price hikes, along with ongoing cost-saving and productivity initiatives. He cautioned that input costs remain volatile and further price increases may be required if the geopolitical situation in West Asia worsens.
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“If sowing of crops such as pulses is affected because of El Niño and commodity prices rise, we will increase prices of our branded pulses. We have already seen the impact of a delayed and erratic monsoon on tea prices, with inflation currently at 7-10%. If tea prices move up further, we will pass on the increase to consumers to protect margins,” D’Souza said.
The company has already raised tea prices and is adopting a wait-and-watch approach over the next 15-30 days before deciding on any further increase.
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Tata Consumer Products, which owns brands such as Tata Salt and Tata Tea, reported a 14% year-on-year increase in standalone revenue from operations to Rs 4,028.32 crore for the quarter ended June, while net profit remained largely unchanged at Rs 714.27 crore. The company said margins in its India business came under pressure during the quarter because of raw material inflation.On a consolidated basis, revenue from operations rose 11.9% year-on-year to Rs 5,348.88 crore, while net profit increased 28.4% to Rs 444.86 crore.
The domestic branded business posted 13% underlying volume growth during the quarter, while the international business grew 16%, or 3% in constant currency terms.
The Tata Starbucks joint venture reported an 11% increase in revenue, supported by strong same-store sales growth, taking its store count to 498.
Among categories, Tata Sampann delivered 58% revenue growth, driven by strong performance across its portfolio, while the ready-to-drink beverages business recorded 41% sales growth.