US arm improved mkt share despite price rise: Tata Coffee

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US arm improved mkt share despite price rise: Tata Coffee

Tata Coffee reported dismal numbers for the quarter ended December 31, 2011. The company's net profit plunged 51.67% at Rs 24.03 crore, same period last year, due to its US subsidiary Eight O' Clock riding a rough patch on account of rising prices.

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Tata Coffee reported dismal numbers for the quarter ended December 31, 2011. The company's net profit plunged 51.67% at Rs 24.03 crore, same period last year, due to its US subsidiary Eight O' Clock riding a rough patch on account of rising prices.

Hameed Huq, the managing director of Tata Coffee talks about the company's results and what their road ahead looks like for FY13.

Below is an edited transcript. Watch the accompanying video for more.

Q: Why are your profits and margins under pressure this quarter?

A: You must be referring to our consolidated numbers. What happened is we had gone through a rough patch with our US subsidiary Eight O' Clock on account of rising green prices. We have been able to recoup our market share and the volumes have gone up, coffee prices stabilised at a level very comfortable to us. So we are seeing those numbers recouping them to a large extent in Q4 of this year. Going forward next year looks good for that operation.

Q: This time you did 13%. How much do you think you could recover your margins?

A: I wouldn't like to give a specific numbers. The most significant part is when we took up various price increases, how we held on to our market share. On the volumes part Eight O' Clock built a little bit. That's why you see our large topline growth consolidated as well. So it's difficult for me to give you precise numbers but things are much better.

The standalone performance of the company at the operating level has more than doubled our profits. This is a trade-off between where business that buys the green coffee and another business that sells the green coffee. Although the volume of the two businesses may not be identical but there is a very significant improvement in the plantation and the instant coffee business. Going forward that will remain very strong. We have committed large volumes in export with dollar-rupee parity which is coming through alright.