Sunil D’Souza has been Tata Consumer’s MD & CEO for a little over a year now. In this conversation, he shares his experience and views on the progress in FY 20-21 across diverse fronts, despite the challenging environment. He also provides insights into the transformation in progress at Tata Consumer.

Why do you call the present events and progress at Tata Consumer transformational? How is it different from business-as-usual, and what set it in motion?
The merger that led to the formation of Tata Consumer was the start of creating a new-age consumer company that has scale. To fulfil Tata Consumer’s expanded ambition, we needed to transform the organisation on many fronts. We began that journey last year and have made significant progress. Our efforts directed at simplifying processes, synergising operations and scaling impact have started to show results. In the process, we also discovered the relative strengths of our brands, network and relationships. The outcomes are positive, as evidenced not just in our results but also in the manner in which the team came together to deliver despite the pandemic. Having said that, we have a long way to go. We are defining and designing our organisation and approach around this ambition. That’s why I call it a transformation-in-progress.

Can you be a little more specific on what aspects of the business need to be transformed and how has the progress been?
We began with building an integrated, unified organisation so that we would have a strong foundation. We redefined our vision, mission and values to reflect our path forward. Paralelly, we also looked at the strategic and operational aspects.

We announced a clear and holistic strategy and are mapping and reporting progress against it, as you will read across this Report. This is our north star. Tied to it is operational transformation such as in our sales and distribution infrastructure, supply chain and capability building towards being a multi-category FMCG player. In our S&D overhaul process, we rationalised layers, created a larger and more robust distribution footprint and ensured end-to-end digitisation for distribution partners. Similarly, on the supply chain side, we integrated and consolidated our footprint and have recently implemented Integrated Business Planning (IBP) for seamless planning and execution. We completed our ERP migration to S4HANA in record time and finalised the synergy identification and integration process, to begin realisations from the third quarter. This, while delivering double-digit growth with market share gains across Tea and Salt - our largest product categories

This is an ongoing journey. Some specific areas we are looking at augmenting this year are digital, innovation and accelerating synergies further.

Given this background, what are your thoughts on the performance for the year?
There are two ways to look at it. We reported strong performance, growing revenue by 20%, adding around Rs. 2,000 Crores to the topline coupled with strong volume growth. We reported a consolidated EBITDA growth of 20% and more than doubled our net profit with strong free cash flow conversion. This was made possible by strong portfolio performance, with many brands delivering remarkably.

However, I feel particularly good about the progress we made against our strategy and the quality of our growth. We delivered on our commitment to complete the integration of the India Food and Beverages businesses, and the synergy benefits have begun to flow in. We expanded distribution and enhanced focus on premiumisation, leading to robust outcomes in the core portfolio. The FMCG ambition was bolstered through two strategic acquisitions in India – Soulfull and NourishCo, which helped create a much wider portfolio. Our international business also saw healthy revenue and volume growth and new offerings and consumer propositions won us recognition across the UK, US and Canada markets.

We strengthened our brands, drove innovation, streamlined our processes and supply chain. In short, we ensured our products were reaching consumers seamlessly, without compromising the safety and wellbeing of our people.

How does all of this tie up with the key emerging consumer trends? How is Tata Consumer positioned on these?
Consumer trends in our business do not generally change overnight, but the pandemic has led to an acceleration of certain trends.

We saw the emergence of do-it-yourself cooking and the rise of the home chef. Convenience shopping, deliveries and e-commerce adoption accelerated exponentially as a result of the lockdowns and their aftermaths. And, of course, health and wellness became a key area of focus for consumers, having a direct impact on their food and beverage choices.

We are fully seized of these developments and have the ability to be nimble when we see a long-term opportunity. Since our product portfolio has always had a focus on health and wellness, we were well positioned to meet consumer needs. Today, we have multiple products that are not just addressing, but also shaping these preferences, across our key markets and categories. For example, in India we launched Haldi Doodh and various ready-to-cook nutrimixes under the Tata Sampann portfolio. In beverages, we launched Tata Tea Tulsi and Tetley Immune. In our international markets, Tetley Super teas and Good Earth Kombucha were launched in keeping with consumer preferences.

To capitalise on the increased adoption of digital by consumers, we strengthened our e-commerce capabilities, and its overall contribution to sales more than doubled from 2.5% to 5.2% in India. Our e-commerce presence in the international markets strengthened significantly, with the USA seeing a triple-digit growth in the channel. We also launched our own premium D2C brands in India, including Tata Tea 1868 - a range of luxury teas and Sonnets by Tata Coffee- a premium range of roast and ground coffees, to leverage the shifting consumer mindsets and shopping trends.

That sounds remarkable even for a normal year, and FY 20-21 was anything but. What was key to managing continuity of operations and these changes, and how did you involve your team?
SD: We planned; and we collaborated relentlessly. And we never took our eyes of the ball. When adversity stares in the face, great teams come together to make things happen. I am incredibly proud of multiple examples of people stepping up and going the extra mile, to realise the common goal of emerging stronger on the other side of the crisis. We strengthened our brands, drove innovation, streamlined our processes and supply chain. In short, we ensured our products were reaching consumers seamlessly, without compromising the safety and well-being of our people. We offered support to our people to ensure mental and physical wellness, recalibrated to a new way of working, and are now doubling down on those efforts along with encouraging rapid vaccinations as the country grapples with the brutal second wave.

Our resolve to build a future- and change-ready organisation remains resolute. There is emphasis on fostering a purpose driven, high-performance culture and we are investing in capability and capacity building; and creating multiple new functions that will lead future growth.

How do you ensure that all of this is sustainable, and creates a responsible business? How are you doing on ESG parameters?
Sustainability has been a cornerstone of our corporate strategy. We inherit this from our parent group and legacy, and it is firmly embedded in our vision. We adopt a 360-degree view of sustainability, and our actions encompass sustainable sourcing, community benefits, climate change management and helping build a circular economy. We supplement this with enhanced quality and responsibility on the product side, prudent consumer communication, a strong people focus and adhering to the highest governance standards. In everything we do, value-creation for all stakeholders is a key consideration.