Managing Director & CEO, Tata Consumer Products Limited
Have A Clear View Of How To Shape The Product Portfolio: Tata Consumer Products | CNBC-TV18 Turns 26
CNBC-TV18 Turns 26 | #CNBCTV18Exclusive
Sunil D'Souza, MD & CEO of Tata Consumer Products tells @CNBCTV18News
-Should see a real uptick coming in demand at the end of Q4
-Have a clear view of how to shape the product portfolio
-Have about 55-57% market share in general trade
#tataconsumer #tataconsumerproducts #cnbctv18 #businessnews #businessnewstoday #businessnewsinenglish #sharemarkettoday
🔴CNBC TV18 LIVE TV: https://youtube.com/live/P857H4ej-MQ
SUBSCRIBE to our Channel: https://bit.ly/3nvEcxf
---------------------------------------------------------------------------...
About Sunil D'souza
Sunil D'Souza, Managing Director and CEO of Tata Consumer Products, stated during the company’s Q1 FY27 earnings call that growth businesses grew 47% year-on-year and scaled to 36% of the portfolio, describing it as the best-ever quarter for those businesses. He said that 25 to 30% growth should be the new normal going forward. On tea procurement, D'Souza noted he has stopped trying to forecast tea prices, observing 7 to 10% inflation in the category and a good crop in Assam, with inflation more pronounced at the bottom end of the portfolio. At the company’s 63rd Annual General Meeting, D'Souza outlined medium-term margin targets, stating the company will look at 17% EBITDA margin and eventually aim to cross 20%, with an improvement of 50 to 100 basis points per year. He also noted the dividend policy is to provide 50 to 75% of profit after tax, with the company paying 60% on a standalone basis and 62% on a consolidated basis. In a podcast interview, D'Souza said that in FMCG, "the real cola wars are fought on the street" and that availability is key for impulse products. He also stated a preference for team players over superstars, saying "I would rather have 10 ordinary people rather than have one superstar" because business is about creating a lasting team.
Transcript (16 segments)
M
Mangalam0:01
Well, on our 26th birthday, to get a state on the pulse of consumption or to get a pulse check on the state of consumption in our nation, we do have a nifty company joining us from the consumer space. Sunil D'souza, the MD and CEO of Tata Consumer Products joins us here in our studio. Thanks. So, thank you so much Sunil for joining in and being with us through the last 26 years, but at the same time, giving us a status check on how consumption is. The Tata Group obviously a hallmark of all things leadership and longevity, we can take a leaf or two out of their book as well. But just from a consumer business standpoint, sentiment standpoint, how has it been post festive season? Has it stayed the course or has it seen a tapering post the festive season?
S
Sunil D'souza0:44
So, Mangalam, first of all my congratulations to CNBC on your 26th anniversary. I would take a slightly longer-term view. I think post last October, November onwards, things have started to get better. I think the GST cuts, especially on a lot of food items which are 12 and 18 going down to five, that definitely the hypothesis was it will give us spur. We are in the food and beverage business. There's a little bit of seasonality around festivals, but broadly I mean tea, salt, people have it on a daily basis, right? So we did see a bit of channel-related disruptions last probably third week of September just before GST kicked in. But after that, we are seeing decent amount of volume growth. So, I would say the best is yet to come because normally what happens with all the stimulus which has happened in the economy, whether it is capex going in, whether it is income tax slabs getting reset, GST now coming down, or interest rates dropping, normally the first impact is on discretionary stuff. I would go and buy my scooter, my television, this thing before I start to upgrade my food and beverage preferences. So I would say probably Q4, end of Q4, is when you should start seeing the real uptick starting to come in.
M
Mangalam2:11
All right, we have Ritu asking a question as well.
R
Ritu2:14
Well, Mr. D'souza, I quickly wanted to come in on when you talk about this kind of growth, the best part is yet to come. How big a role will inorganic play? We've been seeing reports that you are in talks with Danone to acquire their India nutraceuticals and specialized nutrition portfolio. If you could come in on that, if that is the kind of space you're looking at for inorganic opportunities, and at what stage, if at all, where these talks are.
S
Sunil D'souza2:42
So, Ritu, if I got the question right, you are asking me about Danone and what was there on the front pages of newspapers. I wouldn't comment specifically on media speculation per se, but we remain, we are always talking to multiple entities at the same time because we've got a clear view of how to shape our portfolio. We were a tea and salt commodity-based company; we've slowly moved up the value chain. If I may, we acquired Soulful. We've built Sen from scratch. We're now building Tata Simply Better. We acquired Capital Foods, Organic India. Health and Wellness space is always of interest. Organic India supplements, green tea, etc. That was very much part of the play. But as and when something happens, I'm sure I'll let you know first.
M
Mangalam3:38
You know, you left us at a cliffhanger when it was the Bisleri deal as well. Thereafter there was the Organic India deal and the Capital Foods deal. Two of them happened, one did not happen. Like you said, a lot of things happen at the same time. You had said that dairy by itself may not be an industry of interest to you, but we'll discuss all of that. We're leaving our viewers at a cliffhanger too. We'll take a short break, come back, discuss whether Tata Consumer buys Danone or not and more on the business after this short break. Stay with us.
We had a cliffhanger. Now we are continuing our conversation with Sunil D'souza of Tata Consumer. Sunil, Ritu asked you about the Danone deal. You said that you will not comment on speculation, but just as a category, dairy, how would you look at Danone versus all the others and what would your thoughts on the category be?
S
Sunil D'souza4:29
I wouldn't comment on Danone because I don't know the details of their dairy pieces, but conceptually we have said we will not get into dairy. We made a public statement saying exactly that, because if you need to get into dairy, you have to be full-fledged into dairy. Now the whole hypothesis of having synergies, bringing in cost to bear, distribution systems, logistics: dairy is a different animal. Most dairy companies are dedicated dairy because you got to play the whole portfolio. Then you got to play milk, butter, cheese, paneer, whatever the whole range. You can't say I will only play in this part of dairy and not the others; then you're not a milk player. And then you got to set up your procurement systems. Then you get into this whole thing of cooperatives, governments, local governments, etc. So we've decided that that's not the thing. And especially if you're getting into high-end dairy, then you've got to set up chilled distribution systems, which is a completely different kettle of fish. My whole hypothesis has been putting up a truck in which there is tea, coffee, pulses, spices, everything going onto the same truck.
M
Mangalam5:34
So, we take that as a no.
S
Sunil D'souza5:36
Again, I'd say I would not comment on media speculation.
M
Mangalam5:46
So there are specialized nutritional products in Danone and not just dairy. So probably maybe some part of that business he'll pick and choose on his plate. Anyway, you mentioned there seeing decent volume growth after the GST rationalization and you're expecting the full effects to come in from Q4, but do you believe that the market share is coming back as well along with the volume growth? We're seeing some bit of decline in the market share in this quarter.
S
Sunil D'souza6:06
So on the market share, I've got a specific point of view. If I give you my numbers, last quarter, 14% was quick commerce, 7% was e-commerce, that's 21, 16 modern trade, 37, and I've got about 5 to 7% institutions and other business. So just about 55 to 57% is general trade, and that's what is measured in a sampling manner by Nielsen. Nielsen, while they do give us online shares, I believe they're not confident enough of their entire panel and that's why they don't make it public. Right. But even if I ignore that for a minute, you're only sampling half the market. That's number one. Number two, I would lay more emphasis on reading comparative commentary and comparing like-for-like growth rates, and I do think if you look at it at least for the last probably three or four quarters, we've been outpacing the rest of the players in the market.
M
Mangalam7:04
All right. First half just under 10,000 crores. You end this year with over 20,000 crores in top line and 15% margins. Before we let you go,
S
Sunil D'souza7:11
The full year might not land up at 15, but the exit should be comfortably 15 plus, because in the initial part of the year we did have the pressures of tea and we had US tariffs. Now US tariffs on tea for example have gone to zero. So I've got good business out there, and yes, top line we are gunning for the 20 range.
M
Mangalam7:32
All right, we take that point. Thank you so much, Sunil, for joining in and hope to get you more often in our studio as well. With that, we'll take a short break, come back, get you more of the markets and a lot of stock-specific action on the other side. Stay with us.
N
Narrator7:52
26 years.