Tata Consumer Products

Tata Global Beverages was the top loser the day it announced its disappointing set of numbers for Q2FY14. The company for the quarter had an exceptional of Rs.92 crore and this is what helped the company end Q2 with a 51% (YoY) rise in consolidated net profit at Rs.180 crore. Net sales rise at 3% (YoY)was muted at Rs.1906 crore. Total expenses surged 4% and this was on account of higher cost of raw material and a 27% rise in advertising costs. The exceptional gain came in through various sources – profit on sale of property in Bangalore, Rs.86 crore coming in as realized profits and then write off of various other costs, which ultimately left the company with a gain of Rs.92 crore. Excluding this gain, net profit for the quarter would have been down 14% at Rs.81 crore. EPS would also slip from Rs.2.80 to 0.91 paise.

The good part is that, at the end of the year, when we look at the sum total of the profit, the picture for FY14 will end up looking very good, exceptional gain or not. Net profit for H1FY14 is at Rs.292 crore and it had ended FY13 with a net of Rs.373 crore. Thus with two more quarters to go, barring any ‘exceptional expense’ the company will actually end FY14 on a much higher note. Meanwhile, the board has approved the proposal of merger of subsidiary Mount Everest Mineral Water with the Tata Global Beverages wherein shareholders of Mount Everest will get 3 fully paid up equity shares of Re.11 each of Tata Global for every 4 fully paid up equity shares of Rs 10 each of Mount Everest.