Tata Coffee manages impact of COVID-19 admirably

Tata Coffee Limited has announced that since the lockdown situation is now being relaxed, its operations have restarted at full capacity in their instant coffee plants in India as well as other locations, including at the plantations. The harvesting of coffee and pepper has been completed while the hulling of coffee is still in progress.

Due to the company’s heavy reliance on expo rts in case of green beans and instant coffee, COVID-19 crisis has led to it facing some major challenges across its key markets which include Russia and Western Europe. We can see such impact based on the level of customer orders received, which usually depends on 'out of home' consumption demand, normalcy of ports and other operations in different markets.

Since most of the countries have been gradually lifting the lockdown restrictions, the company’s management is optimistic that the demand will eventually revert to normal levels. To cope with this crisis situation, the company has taken up some cost-optimization initiatives that include improving efficiency parameters in instant coffee factories, increasing the productivity in plantation operations through intense review of all activities and rationalization of administrative overheads.

Coffee prices have been restrained due to lower ‘out of home’ consumption and stronger US dollar. While the company is adversely impacted by the current price environment, its healthy product portfolio and its ability to cater to its customers with its niche and differentiated premium products safeguards the company to a considerable extent.

Despite COVID-19 situation, the company managed to deliver 12.2 per cent YoY growth in revenue in Q4FY20, while its EBITDA and PAT grew by 22.4 per cent and 34.7 per cent respectively.

The stock of Tata Coffee rose 2.4 per cent on Thursday, making an intraday high of Rs 78 on BSE.