Operating environment is still volatile, says Tata Consumer chairman

The current operating environment remains volatile, and various factors are driving persistent inflation, which will likely impact demand across categories, N Chandrasekaran, chairman of Tata Consumer Products, told shareholders at the company’s 59th annual general meeting on Monday.

Factors driving inflation as spelt out by the company include geo-political tensions, supply-chain challenges, and demand-supply mismatches in crude oil and several other commodities.

“In this uncertain environment, we will continue to focus on strong execution, maintaining agility and nimbleness to adapt, navigate short-term bumps, and, more importantly, take advantage of opportunities that could arise,” Chandrasekaran said.

While calling out the challenges due to the pandemic, he said: “The challenges posed by the pandemic and, more recently, geo-political developments have resulted in a volatile macro environment with a wide-ranging impact on people, economies, and businesses.”

However, the challenges have also thrown up opportunities for the company to adapt to new ways of thinking, be agile, and build for the future.

“This mindset has helped your company deliver strong overall performance,” he said.

The company is scaling up its distribution footprint and increasing its portfolio, and it will focus on water. It has a reach of over 201 million households in India and distributes its stuff to over 2.6 million outlets.

“We will continue to look for any expansive opportunity in water, food and beverages, and new categories, which may come through acquisition,” Chandrasekaran said.

“Inorganic expansion is one of the key strategies for the company. Cash will be used for this,” he said.

Tata Consumer will expand its R&D budget. Last year the company had a budget of Rs 23 crore and this year it stands at Rs 30 crore.

The company will increase its R&D budget in the future.

In FY22 the company spent Rs 250 crore on capacity expansion and in FY23, it will spend Rs 361 crore, of which Rs 161 crore will be project work.

Tata Consumer will remain focused on the Indian market. It will concentrate on expanding its distribution, expand its product portfolio, and enter new categories.

“(Our) focus will be on the US, Canada, and the UK, and we have rationalised our presence in all other markets,” Chandrasekaran said.

Answering a question on Tata Consumer’s online sales, he said those through Big Basket were about 2 per cent, adding that the company hoped to increase this and leverage digital channels.

“Digital transformation across the organisation and the value chain is a key focus area for us and work on this is well underway,” Chandrasekaran said in his speech before taking shareholders’ questions.

While answering questions on its cafe chain Tata Starbucks, Chandrasekaran said it had become EBIDTA (earnings before interest, depreciation, tax, and amortisation) positive this year and would continue its strong expansion.

“Despite the challenges posed by the pandemic, we opened 50 new Tata Starbucks stores last year, taking the total to 268 across 26 cities,” he said.