Current economic scenario in India as well as global markets is challenging: Chandrasekaran

NEW DELHI: Scarcity of labour due to large-scale migration, restrictions on movement and transport and time taken to streamline retail operations will persist in the short term, though the situation has progressively improved, Tata Consumer Products (TCPL) chairman N Chandrasekaran said at the company’s first annual general meeting (AGM) after the merger of the consumer business of Tata Chemicals with Tata Global Beverages.

“Our business was impacted by the lockdown restrictions imposed by various governments across the globe to manage the Covid-19 pandemic,” he said. Chandrasekaran said that while Tata Consumer Products managed continuity in production and supply chain operations internationally, it faced logistical challenges in the Indian market.

TCPL managing director Sunil D’Souza said in a presentation that the focus and priorities of the company for FY20-21would be building on its core business, dri-ving digital innovation, unlocking synergies between various businesses and exploring new opportunities.

The company, which sells salt and tea under the Tata brand, Himalayan and Water Plus waters and Sampann pulses, reported consolidated revenue of Rs 9,600 crore in FY20.

TCPL, which was formed after the merger of Tata Global Beverages and the foods business of Tata Chemicals, sells tea, coffee, salt, pulses, spices, packaged food and water. The merger was completed in February this year, a month before the lockdown began.

Chandrasekaran said the merger marks a new strategic direction for the company with broader exposure to growth opportunities in the Indian FMCG market across all categories. During the year, Tata Consumer acquired the branded tea business of Dhunseri Tea and PepsiCo's 50% stake in the NourishCo Beverages JV.

“We saw a mixed response across our different businesses — panic buying and closure of restaurants led to spike in retail and online sales for both our Indian and international branded businesses,” Chandrasekaran said. “However, food service sales and our out-of-home businesses were impacted significantly,” he added.

The lockdown by the Indian government to curb the Covid-19 pandemic starting March 25, with a 4-hour warning, brought businesses to a standstill with supply chain disruptions and malls and restaurants shuttering overnight.

Chandrasekaran said the company adapted to the situation with new delivery models to consumers, launching impactful brand campaigns in the current context and closely monitoring changes in consumer buying behaviour.

On its cafe venture Tata Starbucks, Chandrasekaran said the business is exploring additional revenue models including delivery and open pick-up systems. Tata Starbucks clocked 21% growth in revenues for the year due to new store openings and robust in-store performance and added 39 new stores, taking the store count to 185 stores.

“Due to the pandemic, operations in Q4 were adversely impacted because of the closure of stores during the period of lockdown. In the short term, store reopening and ramp-up will depend on the pace at which normalcy is restored in the economy and the return of consumer confidence,” he said.

“It will be critical to closely monitor consumer trends and buying behaviour across markets, so that we can effectively adapt our business models and product offerings,” he said, adding that health and wellness will remain a key consumer trend across markets in beverages and foods. The company said it will bolster its distribution and marketing channels and step up presence in overseas markets including the US, UK and Canada.