TCPL growth will be mix of volume & price; eyes over 20% EBITDA margin: Chandrasekaran

FMCG major Tata Consumer Products Ltd (TCPL) will pursue a combination of volume-led growth and selective price increases to drive expansion, while targeting an EBITDA margin of over 20 per cent in the coming years, Chairman N Chandrasekaran said on Wednesday.

Addressing shareholders at the company’s 63rd Annual General Meeting, Chandrasekaran said profitability would improve through a better product mix, higher volumes and contributions from newly launched categories.

“The growth will be both volume-based and pricing-based. The company is very clear that volume growth is important because we cannot deliver growth only based on pricing,” he said.

Chandrasekaran, who is also Chairman of Tata Sons, said volume growth would remain a key priority for the FMCG company even as it undertakes selective price hikes to mitigate the impact of rising input costs. “The company is very clear that volume growth is important because we cannot deliver growth only through pricing,” he said.

He added that price increases become necessary when commodity costs rise sharply. “Whenever there is a significant increase in commodity prices, we have to take price increases, as we did in tea. But it is not always possible,” Chandrasekaran said.

While replying to a query on Starbucks in India, he said it has the potential to expand to about 8,000 outlets over time.

Over future acquisitions by TCPL, Chandrasekaran said the company remains focused on ensuring that recent acquisitions generate strong growth and adequate returns on the capital invested, while continuing to evaluate new opportunities.

“The management and the board are conscious of the fact that capital has gone in, so we have to get the acquisitions to deliver strong growth and returns on the capital that has been put in,” he said.

Chandrasekaran said TCPL would continue to assess potential acquisitions to strengthen its portfolio, with investment decisions guided by value creation and capital efficiency. “At the same time, we will constantly evaluate any new opportunities to add to portfolio and the board will take right call,” he said.

Addressing shareholder’s concerns over profitability, TCPL is “operating around 14 per cent EBITDA margin. The company in medium term will look at 17 per cent and eventually goal is to cross 20 per cent EBITDA margin,” he said, adding “there has to be an improvement of 50 to 100 bps, in a good year 100 bps, in another years 50 bps at least.”