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."
Sunil D’ Souza
MD & CEO
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
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 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
Our inclusion in the Nifty 50 index is
a validation of these efforts and the
strong stakeholder confidence in our
approach and initial results of our
We divested our non-branded businesses in Australia (MAP out-of-home coffee) and food-service business in USA (membership interest in Empirical Group LLC and Southern Tea LLC) to ensure a laser focus on our core business.
Finally, our inclusion in the Nifty 50 index is a validation of these efforts, and the strong stakeholder confidence in our approach and initial results of our transformation.
Let us talk about integration of the F&B portfolio in
India a bit more, given that it was a key driver of the
merger. Can you throw more light on some specific
benefits you are seeing as a result of it?
Like I mentioned earlier, a major component of the integration was the redesign of our sales and distribution architecture and network in India. This has led to substantial enhancement of our reach. While we rationalised our distributors, we added +30% feet on street in the system and our direct outlet coverage has gone up by 30% and numeric distribution increased by 15%. We are focused on increasing our rural reach for which we now have 3x the number of territory sales officers and have already added 2,000+ rural distributors. Our dedicated, channel-specific sales teams cater to e-commerce, modern trade, institutions, and general trade. All these actions gave us more feet‑on-street, enhanced reach, dedicated channel focus, better execution, lower cost-to-serve and improved service levels.
There were significant benefits on the supply chain side as well. Consolidation of CFA locations across the Food and Beverages businesses led to optimisation of the vendor base and warehouse network, and leveraging synergies of scale to optimise back-end costs. Our Integrated Business Planning tool facilitates more agile and effective demand and supply planning, and the best-in-class ERP implementation will lead to further efficiencies and faster decision-making. We are on or ahead of our targets to drive Rs.100-150 Crores of synergies.
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
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
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.
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."
Sunil D’ Souza
MD & CEO
We are working towards optimising packaging, making efficient use of resources, and reducing environmental impact without compromising on product quality and safety. Our Beverages production facilities globally are zero waste to landfill. In India, we achieved plastic neutrality through our Extended Producer Responsibility (EPR) plan for the collection and disposal of plastic packaging waste on a brand-neutral basis. We are also members of the UK Plastics Pact, a collaborative initiative between UK businesses across the plastics value chain, the UK government, and NGOs to create a circular economy in plastics.
Sustainability has been a cornerstone
of our corporate strategy. We have
inherited 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
Last year, we were recognised for our tea sourcing practices in India by the CII Food Future foundation. We were also recognised for our actions towards protecting the environment and preventing climate change by CDP India 2020 Climate Change Report for the second consecutive year. Our community initiatives are well thought of and create lasting value for the beneficiaries.
Any closing thoughts? What is the road ahead for
I would like to express my gratitude towards our consumers, partners, employees and the Board for their support during this year. I am proud to be leading a group of highly driven colleagues who did not spare any effort to make this year what it was, and I am deeply appreciative of their efforts. We are committed to fulfilling the aspirations of all our stakeholders and directing all our energies towards the ambition of being a formidable player in the FMCG category. We now have a strong foundation and will build on it to accelerate our growth momentum. We will continue to focus on our strategy and remain nimble enough to adapt to the evolving operating environment. The macro economic environment is challenging, and this may need us to recalibrate some of our plans. We are prepared for that. However, I also believe that this is only the beginning, and our best is a long way ahead.