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% 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.
ALSO READ: Cognizant Turns Employee Interaction Data Into A $200-Million Sales Pipeline Using AI
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 the portfolio and the board will take the right call," he said.
Addressing shareholder's concerns over profitability, TCPL is "operating around 14% EBITDA margin. The company in medium term will look at 17 per cent and eventually the goal is to cross 20% 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."
Chandrasekaran said investors often compare TCPL's EBITDA margin with some competitors, but stressed that margins should be viewed in the context of prevailing business conditions.
"There are a lot of questions on EBITDA margins, how we will maintain them, what the trajectory will be and why our margins are lower than some of the competition. The way to look at it is that margins have been improving sequentially," he said.
He noted that adverse factors such as supply chain disruptions and commodity inflation, particularly in categories like tea where the company has significant exposure, can weigh on profitability.
"In a tough year, when there are supply chain issues and commodity price increases, especially in categories where we have significant exposure like tea, it does impact margins," Chandrasekaran said.
He also said TCPL has plans to increase the margins of its growth businesses, which includes select portfolio of high-potential, non-core categories such as - Tata Sampann, Capital Foods, Organic India, NourishCo, and Tata Soulfull
"The growth businesses this year have been growing at 24%. The plan is to increase the margin in these businesses,” he said.
Over its businesses, which TCPL acquired as Capital Foods, Soulful, and Organic India, Chandrasekharan said they are high-margin.
"The plan is to get these acquisitions to start contributing at least 25 per cent growth rate year-on-year, so we have work to do," he said.
Overperformance of TCPL, which crossed Rs 20,000 crore revenue mark in 2026, Chandrasekharan said TCPL is being built as a diversified FMCG player with a long-term perspective.
"I think the way to look at the Tata Consumer products is we are building this business over a medium to long term, and this company was only a beverage company and predominantly focused on tea and a little bit on coffee and very small on water. Now, this has gained the status of truly a food products and beverages and FMCG company, and we are adding to the portfolio," he added.
He said TCPL's growth strategy would continue to balance premiumisation, product innovation and portfolio expansion while catering to both mass-market and premium consumers.
Rejecting the notion that India is not a premiumisation market, Chandrasekaran said the country comprises multiple consumer segments and offers opportunities across price points.
"We are both a mass market and a premium market. We have multiple customer segments, so we need to address the needs of all customer segments," he said.
The Tata Group company's chairman said innovation remains a key growth lever, with around 80 products launched during the year. Innovation currently contributes 4.5 per cent of sales, and the company aims to raise the share to 5 per cent.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.