For the quarter that ended in December, TGBL reported a 30.51 per cent increase in consolidated net profit to Rs1.88 billion. This was against a net profit of Rs 1.44 billion during the same period a year earlier, TGBL said in a regulatory filing on February 2.
According to Vishal Gutka, an analyst at Phillip Capital, besides the fact that the acquisition will lead TGBL into a category where it doesn’t have a presence currently, there might not be any merit in the move. “It’s a very niche segment with premium pricing in select markets. Plus, TGBL will need to build a separate distribution network for the ethnic juice business. Therefore, it makes little sense for the company to buy it,” he said. The ethic juice category, owing to a low base, has been expanding at more than 20 per cent per annum, year on year, said Gutka. Besides tea, TGBL has presence in branded packaged water and coffee retail chain through a joint venture with Starbucks.
As part of the larger strategy to make Tata group companies
more agile and profitable, Chandrasekaran has chalked out a plan to prune the group’s presence and exit from non-core, non-profitable entities, and enter high-growth segments. Under this, TGBL has been exiting its loss-making businesses. During the quarter that ended in December, TGBL divested its holding in its overseas associate, Estate Management Services Pvt Ltd (EMSPL), to withdraw from the plantation business and focus on packaged branded tea.