Net profit nosedived to Rs 92 crore in the December quarter from Rs 396 crore in the same period a year ago. Net sales, during the period, went up by 21% to Rs 1,540 crore from Rs 1,278 crore.
Operating profit rose by 17% to Rs 165 crore due to improved performance and lower interest costs, the company said in a stock exchange filling. But the notional loss on translation of short term foreign currency financial assets has pulled down the net profit.
Meanwhile it was further reported that the company is actively looking for coffee and beverage business acquisitions in Asia and Europe and has a Rs 1,700 crore war chest readily available.
Acquisitions, said chief financial officer L Krishna Kumar, will help the company bridge the gap, even as it keeps focus on organic-growth initiatives. He adds that markets such as Russia, Eastern Europe and Asia-Pacific are areas where the company is scouting for buys.
Over the last decade, it had bought Tetley in the UK in 2000, Good Earth in the US in 2005, Jemca in the Czech Republic and Joekels Tea Packers in South Africa, both in 2006. In August 2006, it acquired a 30% stake in US based Energy Brands Inc or Glacéau for about Rs 3,200 crore. However, it sold its stake in the company to The Coca-Cola Company one year later for Rs 4,900 crore, booking a profit of about Rs 1,700 crore on the transaction.
This cash, says Kumar, is available to the company for acquisitions in new regions. Tata Tea also acquired trademarks Vitax and Flosana in Poland in 2007, even as subsidiary Tata Coffee acquired Eight O’ Clock Coffee in the US a year before.
Kumar says the company’s endeavour is to buy companies/brands in these markets to strengthen its presence there. Russia is one of the largest tea consuming markets in the world. Some other tea consuming regions include Poland, Turkey, Ireland, the UK and Japan, besides India. Besides prospects in tea and coffee, the company is also scanning for targets in the healthy beverages arena.
“By healthy beverages, I mean products that are non-carbonated and non-alcohol,” clarified Kumar.
The third quarter results reflected for the first time its Russian beverage business, which it had acquired last year. A total of 51% was acquired in the branding, packing and distribution company called Grand in Russia.
Source: Economic Times
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