Tata Coffee today posted 40 per cent jump in consolidated net profit at Rs 37.66 crore for the third quarter ended December 31, buoyed by increased sales and royalties from its 'Eight O'Clock' coffee brand in the US.
Tata Coffee had clocked a net profit of Rs 26.90 crore in the same quarter last year, it said in a BSE filing.However, net income fell marginally by 6 per cent to Rs 391.93 crore in the October-December period of 2013-14 fiscal, as compared with Rs 418 crore in the year-ago, it added.
Commenting on its Q3 performance, Tata Coffee Executive Director (Finance) M Deepak Kumar said: "The quarterly profits have risen as sales and royalties from our 'Eight O'Clock' (EOC) brand increased substantially beyond our expectation."
Sales have increased after the relaunch of the EOC brand in the US as also revenue from royalties grew by licensing the brand to the Green Mountain Coffee Roasters (GMCR), a speciality coffee roaster, he told PTI.
Kumar said that the tie-up with the US-based GMCR has led to substantial growth and sizeable presence in the fast growing 'single-serve' coffee market in the US.
Tata Coffee, a subsidiary of Tata Global Beverages Ltd (TGBL) and India's third largest exporter of instant coffee, had acquired the Eight O' Clock (EOC) Coffee Company in 2006 for USD 220 million by borrowing funds. Today, it is part of
the TGBL family of brands like Tata Tea and Tetley.
On status of debt, Kumar said: "We had borrowed USD 168 million for acquiring EOC. We have so far repaid USD 38 million, and also paid out USD 41 million in dividends."
"The entire debt would be repaid soon as EOC's cash generating capabilities are very strong and is paying out dividend on an average USD 8 million every year," Kumar added.
Stating that the plantation products of coffee and pepper performed well during the quarter, Tata Coffee said that the response to 'Freeze Dried Coffee' in high value markets continous to be favourable.
Going forward, the company said it would focus on taking steps in arabica, robusta, tea and pepper to enhance sustainability of its operations.
Shares of the company rose marginally to settle at Rs 975.30 on the BSE today.
The company produces more than 10,000 tonnes of shade grown arabica and robusta coffees at its 19 estates in South India and its two instant coffee manufacturing facilities have a combined installed capacity of 8,400 metric tonnes.