Tata Coffee Q2 profit up 85%

Plantation segment revenue declined 7% to Rs 78 cr

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Tata Coffee has reported an 85-per cent growth in profit during July-September quarter at Rs 24 crore as against Rs 13 crore, a year ago. The growth was driven mainly by instant coffee and the value-added business.

Revenue from value-added business, which includes products such as flavoured coffee or tea, for the quarter was around Rs 115 crore as against Rs 111 crore last year, up by four per cent.

The company’s operating profits of instant coffee and value-added products registered a substantial improvement at Rs 23 crore as compared to Rs 13 crore, an increase of 75 per cent, driven by higher sales volume, lower commodity and other costs.

Growth in sales volume helped the company reduce finished goods inventory, reducing the working capital.

The plantation segment, in line with the pressure on the sector, also witnessed stress during the quarter. 

Plantation segment revenue fell by seven per cent to Rs 78 crore from Rs 84 crore, a year ago, on account of lower plantation products available for sale.

Coffee production in India for 2016-17, post blossom, was estimated at about 320,000 metric tonne, lower by eight per cent, compared to 348,000 metric tonne in 2015-16 (final estimate). While the company did not respond to Business Standard’s queries, Sanjiv Sarin, managing director, Tata Coffee, in a release said, second quarter numbers were helped by the company’s focus on premium products, quality and service.

“Improved coffee terminals have also aided the performance during the second quarter and we will of course have to carefully observe global coffee prices and Indian crop over the next few months,” he said

During the current year, the company expanded its monsooning facilities. Sarin said it had generated good interest from roasters worldwide.

The company continued to grow its instant coffee portfolio by focussing on enhanced sales in key geographies and strengthening customer relationships, said Sarin in a press release.

Tata Coffee has said Starbucks approved its Nullore Estate Microloy Coffee for sale under the Starbucks Reserve brand for sale in US. It will be launced shortly in their select US stores. Nullore Estate Microlot is the first coffee of Indian origin to be chosen by Starbucks in this high-premium segment.