May , 2024
Tata Consumer Product Ltd
15:08 pm

Nandini Dasgupta

Company Profile

A member of the Tata Group, Tata Consumer Products is an Indian Fast-Moving Consumer Goods company. Mumbai serves as the company’s corporate headquarters, while Kolkata serves as its registered office. It is a significant producer of coffee and the second-largest manufacturer and distributor of tea in the world. Tata Consumer Products was established in the year 1962 as a result of the merger of Tata Chemicals’ consumer products division with Tata Global Beverages, formerly known as Tata Global Beverages Limited. The company currently works in the food and beverage sector, with 56% of its revenue originating from India and the other 46% from outside ventures. Following the merger, the business now owns both domestic and foreign brands, including Tetley, Tata Sampann, Tata Salt, Tata Tea, Eight O’Clock Coffee, Good Earth Tea, and Tata Starbucks. Tata Tea is the biggest-selling tea brand in India. Tetley is the biggest-selling tea brand in Canada and the second-biggest-selling in the United Kingdom and the United States. Tata Tea made the decision to expand its brands into international markets in the 1990s. 

Fast Moving Consumer Goods Industry in India

  • Rising product costs, particularly for necessities, and consumer-driven growth contributed to the FMCG sector’s expansion in India. As of 2023, the FMCG market was valued at US$ 167 billion. From 2021 to 2027, the FMCG market’s total revenue is projected to increase at a compound annual growth rate of 27.9%, or close to US$ 615.87 billion. In 2022, over 35% of FMCG sales were accounted for by rural India, while 65% of sales came from the urban segment. Recovering rural demand is anticipated in FY24 thanks to a good harvest and government spending. 
  •    In 2023, the FMCG market had a valuation of US$167 billion. The FMCG market is anticipated to generate approximately US$ 615.87 billion in sales overall between 2021 and 2027, growing at a CAGR of 27.9%. India’s fast-moving consumer goods (FMCG) sector increased 7.5% by volumes in the April-June 2023 quarter—the fastest rise in the previous eight quarters. The industry’s revenue growth was 8.5%.
  •     PLI programs, which are intended to lower import costs, enhance the cost competitiveness of domestically produced goods, boost domestic capacity, and encourage exports, have been allotted US$ 976 million in the Union Budget 2023–2024. 
  • About 3 million people are employed in the FMCG industry, which makes up 5% of all industrial jobs in India. Favorable government initiatives and laws, a growing rural market and youth population, new branded items, and the expansion of e-commerce platforms are the main growth factors for the industry. 
  • India has been ranked as the fifth-largest economy in terms of exchange rate and the third-largest economy in terms of purchasing power parity. The FMCG industry has benefited from government incentives and foreign direct investment (FDI) funds by creating a more stable supply chain, increasing employment, and giving FMCG brands prominent exposure in established markets. 
  • The Indian economy’s fourth-largest sector is fast-moving consumer goods, or FMCG. The industry is divided into three primary segments: food and beverage (19% of the sector); healthcare (31% of the sector); and household and personal care (the remaining 50% of the sector). With an investment of US$ 1.42 billion, the government’s production-linked incentive (PLI) program offers the businesses a significant chance to increase exports. With the epidemic abating, the FMCG sector’s forecast appears to be on track.
  • Rising aspiration levels and rising income have contributed to an increase in consumer spending. However, as the unorganized market’s proportion of the FMCG industry declines, the growth of the organized sector is anticipated to accelerate due to rising brand consciousness and the expansion of contemporary retail.

Company Perspective and Review

  • The balance sheet shows an increase in liabilities as well as equity, suggesting the company’s growth and possible sound financial standing. The rise in assets, especially investments and non-current assets, points to potential for future growth as well as a methodical approach to asset allocation.
  •    Over the previous five years, operating revenue has steadily increased. This expansion shows the company’s potential for in-creased sales, which could be attributed to things like new product introductions, expanded markets, or stronger brand positioning.
  • The business has continuously turned profit after taxes for better, demonstrating its capacity to convert revenue into profitability. Maintaining and increasing this profitability is essential for long-term expansion and the generation of shareholder value.
  •     TATA Consumer Products announced an equity dividend of Rs.8.45 per share, or 845.00%, for the fiscal year that ends in March 2023. With the current share price now, this translates into a 0.74% dividend yield. The business has a strong dividend history, has declared dividends on a regular basis for the previous five years, and is promising.

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