Tata Global Beverages Ltd ADR (TTAEY) Q3 2022 Earnings Call Transcript
Tata Global Beverages Ltd ADR (OTC:TTAEY) Q3 2022 Earnings Conference Call February 3, 2023 3:30 AM ET
Corporate Participants
Manoj Menon – ICICI Securities Limited
Nidhi Verma – Head – Investor Relations and Corporate Communications
Sunil D’Souza – Managing Director and Chief Executive Officer
L. Krishna Kumar – Executive Director and Group Chief Financial Officer
Conference Call Participants
Abneesh Roy – Nuvama
Sumant Kumar – Motilal Oswal
Sheela Rathi – Morgan
Chanchal Kumar Khandelwal – Birla
Shubham Shukla – Voyager Capital
Operator
Ladies and gentlemen, good day and welcome to the Tata Consumer Products Limited Q3 FY ’23 Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Manoj Menon from ICICI Securities Limited. Thank you and over to you sir.
Manoj Menon
Hi, everyone. Really wonderful. Good morning, good afternoon and good evening to depending on part of the world you are joining this call from.
As I said, we are very happy to host retailer consumer [indiscernible] conference call again.
Before I handover to Nidhi for the introduction of the management, just wanted to [indiscernible] our stance on product consumer. We continue to remain constructive on the business. Nidhi over to you.
Nidhi Verma
Thank you. Thank you, Manoj.
Hi, everyone. Welcome to the Q3 FY’23 call. Thank you for joining us. On the call. I have Mr. Sunil D’Souza, Managing Director and CEO; Mr. L Krishna Kumar, Executive Director and Group CFO and Mr. Ajit Krishna Kumar, COO.
As usual we will first spend about 15 minutes or so going through the presentation. And we will spend most of the time on Q&A. So without further ado, over to you, Sunil.
Sunil D’Souza
Thanks, Nidhi. So if I can jump straight to the executive summary.
For the quarter, we grew revenue 8% like it is now 10%. Just for clarification on a three-year CAGR basis, this translates to a 12% revenue growth. Consolidated EBITDA was a bit pressured. We declined 2% year-on-year. But just to highlight last year, we grew significantly on EBITDA during the same process, so recycling those numbers. But even then, year-to-date EBITDA growth was 5%. On a three-year basis, again, EBITDA is also in line with revenue at 12%.
India business grew 8, while the beverage business declined 5% primarily driven by volume. On a three-year CAGR basis, the business is still up by 12% per annum. India Foods business grew at 29 with a 4% volume on a three-year CAGR, it continues to be very, very strong growth at 21%. The international business revenue was up by 4% for the quarter bringing total year-to-date revenue growth to 7. EBITDA for the India business just to reiterate, India business 8% growth, EBITDA grew 13 which means EBITDA margins expanded. However, inflationary pressures, currency and lag in pricing in the international business and more about that when I come to the detail, breakdown the consolidated EBITDA. Margins in the international business improved by about 240 bps quarter-on-quarter.
The primary reason for the softness in the India business was continued stress in rural and especially in tea there is a very high factor of seasonality, especially up north. And therefore, delayed winter in our salient markets led to market share softness. However, in salt we’ve continued to go from strength-to-strength and despite a 33% increase in price during the year we have continued to gain market share.
Our growth businesses are now a significant portion of our business where we started with a 6% in FY ’20. We are up now 13% of our business despite the top-line of the overall business as I mentioned grow by 12%. So they continued to show very strong growth 53% year-on-year.
Next slide. Yes, so key business snapshot India Beverages 1200 crores revenue growth, negative 5 — volume growth negative 5. India Foods, volume growth of 4, revenue of 29 mostly driven by price increases and revenue close to 1000 crores now.
U.S. coffee because we did a fair price exercise to take up price rather than taking up naked pricing. We saw an impact by volume but just to highlight that in international markets, it is revenue top-line which matters more than the volume per se. And we had a healthy volume, — healthy revenue growth up 11% but there is a currency in that even if I strip off the currency, we grew by 1% in U.S. coffee.
International tea, volume was about flat, which is actually good news given the previous quarters that we’ve seen and constant currency revenue growth of 2% because there is a pound to rupee impact in the total revenue which was negative 1.
Tata coffee had a strong top-line growth, though volume growth was negative 9, but that was driven more by timing of sales of coffee, which happened in the last quarter and pepper which we expect in the next quarter taking advantage of price arbitrages between quarters. Consolidated all-in 3475 crores at 8% revenue growth.
On a nine-month basis, overall revenue growth of negative one for India 3765 crores, India Foods up by 26, at 2700 crores, U.S. coffee revenue growth of 18% constant currency 10 not 1000 crores, international tea again constant currency growth of 2% close to 1500 crores. Tata coffee has breached 1000 crore mark very strong top-line growth, all-in the cross 10,000 crores for the nine months, our constant currency growth up 9%.
In financial terms 8% revenue growth negative 2% EBITDA, 1% growth on PBT. We had an exceptional primarily on conversion of a JV into a subsidiary in South Africa which was driven group net profit up by 26. Before exceptionals The net profit is down 5%. Our cash compared to the same quarter last year is up by about 10%.
For the nine months cumulative 10% which is double-digit revenue growth, crossing the 10,000-crore mark EBITDA up 5, PBT up 7, group net profit up 33 driven by this quarter exceptional coupled with previous quarters exceptional from Tata coffee. And group net profit even before exceptional items up by 10%.
Now if I go to just highlight the actions that we’ve had on our strategic priorities, we’re making consistent progress on reach. Now, we had made a commitment right in the beginning when we started off. We started out September of 2020 [thought in] [ph] 12 months we will double our numeric reach or direct outlet and in three years we will double as numeric reach.
Now, just as a perspective, we are quite close to that and then we had made additional commitments through the year as we went by. We have said that March of 2023, we will be at 1.5 million outlets direct. We are close to 1.4 right now. So more or less on track to meet that number. And our target that time in September 21, when we started off was numeric of about 4 million outlets. We are about 3.6 all-in across all our categories right now. But the one issue which we are seeing is that as initially we had combined our sales force to drive efficiency, but now as we increase our portfolio, we need to release bandwidth. And therefore, we are going to split route separate for food and beverage broadly in a simplistic sense in all 10 lakh plus towns which will give us now increased depths in the outlets that we operate in, in this large urban areas.
Apart from that gap in distribution is primarily in semi-urban and rural. So there’ll be a significant moment from sub distributors to distributors in the next two or three months as we see to improve direct coverage in semi-urban areas. We have been making phenomenal progress on the channels of the future, if I may call it, modern trade and ecommerce has doubled as a percentage of our business over the last three years. It continues to go from strength-to-strength, we are up by 34% on revenue on ecommerce and 17% on modern trade. Next slide.
We continued to focus on execution focusing on our strong brand of chakra in the south. We launched our full coffee variant. Incidentally, the Tata coffee Grand Blue Label is a coffee chicory mix, whereas up north, consumers prefer coffee and are willing to pay a premium. So we’ve done that long. We finished our brand harmonization part one which is putting all our value propositions under the Agni brand and continue to drive our premium variant of Tetley.
Next slide, in salt apart from strengthening the Tata salt, which is what you see on the right-hand, which is continuing the questioning of A&P that we have out there in the market apart from that, we continue to look at both expanding our value-added range as well as our mass range. So our [indiscernible] has got off to a good start across the country. In addition, as you’ll see, we are now looking at iron-fortified and vitamin fortified. Shuddh which is our launch down south in weaker solar salt areas. We have learned from the pilot rejigged the mix and relaunched it.
Apart from that, as I mentioned earlier, 40% of the market for spices is down south. We were not serious players there. And now we have entered Karnataka and seen a very good response to our new blend offerings.
Next slide. We continue the momentum on innovation; innovation from point 8% when we started is now we’re targeting to exit this year at a 3% plus. We have put out a premium range of Tata premium moved into 2-in-1s and 3-in-1s in coffee with Café Specials. NourishCo, we have got the first launch of juice jelly combination in India, and this has got to a great start and the Chef Style Masala which is a sprinkling of spices in whichever format you would want.
Next slide. Tata Raasa, our launch of RTEs and RTCs in the Western developed markets is off to a good start with launch. We shipped our containers in December, albeit it’s been a bit slow. But now we’ve got started. We relaunched Tata Soulfull Ragi Bites with extra creamy fill.
Apart from that I talked about the south spices. Rock Salt is taking off in India in a big way right now it is. Rock salt is doing very well. We have launched iodized rock salt variant for the value seeker. The vitamin D plus calcium range I already talked about.
Next Slide. We have now integrated our R&D into three big centers. We’ve got a Center of Excellence sitting in Bangalore, which is a prime center of operation for us. Apart from that Sri City smart food facility is now our Process Excellence Centers for all food and beverage. And in Mumbai, we’ve set up a sensory and a kitchen expertise for the Foods Innocentre.
Next slide. Our growth businesses, which is Sampann, NourishCo, Soulfull and now Tata Smartfooz is up by 53% year-on-year for the quarter, and as I mentioned the contribution has moved from six to 13 over the last three years.
Next slide. On sustainability, we continued to go from strength-to-strength. We won awards for reporting. We linked up with Wastelink, sorry, recycling of waste into animal feed and Damdim Packaging Centre won the energy conservation award for 2022.
Next slide. We also put out our sustainability stories for Tetley and Teapigs’ which have been received very well individually.
Next slide. Talking of our different business per se, India Beverages, I already talked about negative 9% and revenue driven by negative 5% volume. We’ve lost a bit of share. But just to give you some details out there, that revenue has declined because of both pricing corrections as tea prices have come down coupled with some volume declines. And the volume declines have been largely led by the fact that we’ve seen continued pressure on rural markets as well as a delayed winter up north. Just as a prospective. Winter setting late, I would say probably early to mid-December from then on, we’ve seen some volume traction. I would still keep my fingers crossed because seeing that we are back on track but December was decent, January was better than December. So we’re hoping that we’re off to a good quarter.
Despite that, just to highlight on a three-year basis, we are still up by 9% on revenue. Market share is, I will say largely a mathematical calculation because we are stronger up north, so if the north doesn’t fire. Then in the mix of things our share does come down. So hopefully as the north picks up now, we will start seeing the share coming back apart from the fact that rural should start coming back and they’re improving our distribution in semi urban and rural. Coffee continues on a strong growth trajectory of 34%
Next slide. Despite the fact that we took a 33% price increase in salt, we continue to show volume growth is 4 revenue growth 29 and with execution and continuous branding efforts, we have a 90-bps market share gain.
Next slide. NourishCo, 66% revenue growth, 119 crores for the quarter. NourishCo is on track to deliver 600 crores for the quarter just as a perspective May 2020 when we bought out this business, it was at 180 crores. And we continue to drive this growth both through geographical as well as portfolio expansion. Tata Copper Plus is now running consistently the third quarter in a row at 2x of last year.
Next slide. Tata coffee driven primarily by coffee prices per se had a strong revenue growth of 25% both plantations coffee as well as extractions. Revenue growth, overall plantations was negative because as I mentioned, coffee we sold in the previous quarter and pepper, we are planning for this quarter.
Next slide. Starbucks just as a perspective, we suggested the last 12 months we’ve added 65 stores and this number will keep climbing as we go forward. We opened another new store during the quarter, we are now up to 311 and we’re present in 2 new cities going up to 38 totally. Incidentally, the business continues to be EBIT positive.
On the international front, U.K. was 1% revenue growth, market share broadly maintained, we have now integrated Teapigs’ the system. While Teapigs did show a decline that was primarily because consumers are moving from online to offline and we do expect people to start coming back as offline starts growing in line.
In the U.S. market, we had 1% revenue growth on coffee. Tea, while revenue declined more or less, we gained a little bit of share on tea and we continued to maintain our shares more or less in coffee.
Canada continues to be our star performer growth in both specialty tea as well as black driving a total of 5% revenue growth, and we continue to maintain very strong market shares in Canada. I hand you over to LK now for the financials.
L. Krishna Kumar
Thanks, Sunil, and good afternoon, everyone.
Talking through performance highlights for the quarter three. First commenting on the standalone performance we see revenue at 2153 crores higher by 6%. You need to remember that the 6% growth actually consists of a growth of [indiscernible], but more than a 25% growth in the foods business and we expect, like Sunil mentioned around some temporary reasons we expect tea growth to come back in the subsequent quarters.
In terms of EBITDA, we grew more than proportionately 17% growth driven by cost initiatives driven also by improving margins in the foods business. In terms of consolidated performance, revenue at 3475 crores up by 8%. And within that you have India business growing by — India branding business growing by 8%, International up by 2% and non-branded by 22%. So overall, the performance has been very strong in the foods business, slightly underperforming in terms of the international business and tea business that we hope to catch up going forward.
In terms of EBITDA, you see a decline and as Sunil mentioned, the decline is primarily due to the international business which saw a lower profit compared to the same period in the previous year. We talked a little more about it when we come to the segmental disclosures.
Going through the consolidated P&L, overall, we talked about revenue growth in EBITDA, I’m not going to repeat that here. But the point I wanted to make was, if we look at the PBT before exceptional items, notwithstanding the decline in performance of the international business, we are more or less maintain the same number as in the previous year.
In terms of exceptional items we have 79 crores and this is largely consisting of Joekels transaction that Sunil mentioned. Basically, this is an accounting required by the accounting standard because what was earlier a JV is now becoming a subsidiary and we’ll go into consolidation. So it is accounted as the sale of minority interest and coming back into the results as a subsidiary.
Effective tax rate slightly lower is because of the fact that the Joekels transaction is not liable to tax. It’s only in the consolidated book. Group net profit, 364 crores higher 26%. Now, between PAT and group net profit, we have to share our profit loss from JVs and associates, you’ll see that in the statutory results. You’ll see it slightly worse compared to the same period in the previous year, because the low profitability primarily in the plantation business and one-off costs in the Starbucks business.
On a year-to-date basis, we are talking a top-line growth in double digit of 10%. EBIT growth of about 5% and overall PAT growth of 27% after exceptional items and a group net profit growth of over 30%.
Moving on, on a standalone basis. As I mentioned earlier, standalone performance has been strong with a 6% revenue growth and 17% EBITDA growth. In terms of exceptional items, no material change. Overall PAT high by 27% compared to the same period in the previous year. One interesting point to note is compared to the year-to-date performance, like you’ll see that overall income to EBITDA, overall, we are improving in terms of EBITDA, that’s the message that I want to leave compared to the same period in the previous years. Whether you look at, the year-to-date, or you look at the quarter goes through an improving trend.
So the underlying India business profitability from situations you had earlier of higher [key] [ph] cost, input cost inflation, I think they’re slowly recovering and coming back to a better profitability position.
Looking at the segment performance, India business 70% of revenues and 77% of segmental results, international 30% of revenues and 23% of the results.
If you look at the individual table, we talked about the India businesses, overall having growth in profits, better than face growth 14% versus 8%. International business you’re seeing a decline of 39% and the segmental result of 88 crores compared to 144. But like I mentioned earlier, the segmental number for the international business in quarter three is better than what you saw for quarter two. So there is some improvement. We have taken a price which is hitting the U.K. market. And some of the price increases taken in the U.S. will be reflective in quarter four and beyond. And we are also having further costs restructuring opportunities, which we’re working on, which will unfold over the next couple of quarters or so.
So that’s the overall performance.
Happy to answer any questions, before that over to Sunil for concluding remarks.
Sunil D’Souza
Yes. So just in summary, for this quarter, we’ve seen demand impacted by sluggishness in rural and semi urban markets and the delayed winter in some of Australian markets. Like I said, we’re putting corrected actions and focus on execution, whether it is expansion of distribution into rural or as I mentioned, December and January look slightly better.
The impact of inflation and monetary tightening on the economics and currencies of our key international markets remains a key monitorable. We are taking in both actions both on the pricing front, as well as, as I alluded to last time around structural cost actions.
Overall, we have been able to deliver double-digit growth for nine months while balancing margins in an extremely challenging global macro environment. If you look at the India standalone business 8% volume, 13% EBITDA growth so we have expanded margins in India, despite all the challenges.
The tea business, as I mentioned, was subdued and in foods business we have taken a key price increase to mitigate input cost, inflation but continue to execute and deliver market share. Our growth businesses have sustained their trajectory continues to keep us in plus and increase its selling. Our out of home businesses, NourishCo and Starbucks are continuing to fire on all cylinders. In the international business, I already talked about pricing as well as structural cost changes. You’ve already seen some moves of the pricing the 240 bps improvement in EBIT margins that I think this quarter you will see substantially more. And despite the inflationary environment and investments required, our consolidated EBITDA margin has expanded quarter-and-quarter and we will continue to do this balancing act of both market share and margins.
Back to you, Nidhi
Nidhi Verma
Thanks, Sunil and LK. Over to the moderator for Q&A.
Question-and-Answer Session
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Abneesh Roy from Nuvama. Please go ahead.
Abneesh Roy
My first question is on the India tea business. So you mentioned that you’ll be working on further expansion in terms of the rural distribution. So I wanted to understand what was the other large Pan India player, in which state would you plan to address this issue? And what kind of gap that you have in mind? And second is, on the competitive intensity from the regional players and other large tea players, how is the situation currently?
Sunil D’Souza
Thanks, Abneesh. Now if I at very specifically versus our large other Indian competitors very, very simply put, if you look at mathematics, we are about 10% to 12% behind on distribution and we are 10% to 12% behind on market share. So while different markets around the country might play out differently. But overall, broadly, I have to make up for 10% increase in distribution assuming they stay flat, they will not. So we have to be slightly ahead of the curve. So that is the whole focus that we need to close the distribution gap, which in turn will help me close the market share gap.
Now if I answer your specific question of where are we trying to close the big gaps? It is in 2 or 3 specific markets. From a value perspective, we have to close our gas in rural Tamil Nadu. In volume gaps, we have to close our gaps in Eastern UP, right, and in some parts of Maharashtra. So these are the big focus areas, but the thrust on increasing distribution in semi-urban and rural is across the country. Just as a perspective, we have a base of about — I would say about 4,000 DSRs today. In between the split routes, which are to improve depth in large urban areas where we already are decent, not good, we are still decent. And between the extra [indiscernible] street to expand into semi-urban areas, we will be adding anywhere from 35% to 40% of the total DSR base as we go forward. And this will be very early on, we’ve already started the work. So that’s number one.
Your second question on locals. See, locals will always be there over a period of time, the brands will take over, and brands will continue to grow. If you look at a 3-year CAGR, we are still about 140, 150 bps above from where we started. You will keep having the small blips up and down, but we do believe as we expand our distribution as we continue to provide value to consumers and as we continue to power our brands with ATL, we will move the unbranded to branded. In the shorter blips when there are price movement especially to the downside, you will have some niggling issues come up, but we remain focused on the longer-term perspective.
Abneesh Roy
Sure. My second and last question is on the Sampann business good or strong 37% growth in both Q3 and Q2. So here my question is in terms of pricing — would you need a price war within the brand? So will you straddle the full price equation, which you have done in your tea or your salt business. When I see your own group company BigBasket, I do see they have Royal and they are popular and there’s a big price difference also. Especially given [indiscernible] segment very aggressively at some stage, what is the purpose in terms of full price saddling over the medium, long-term?
Sunil D’Souza
So Abneesh, whether it’s BigBasket or RIL, you have to remember one fundamental thing. I mean there is a huge, huge, huge runway in all the Sampann category, right? [Consolidation] [ph] number into lakh plus crores category and the whole branded play is less than 1%. So today, I would worry more about how I would execute and I would move. I’m not worried too much about the other players out there because I think I’ve got enough to do on my plate on execution. That’s number one.
Number two, as regards pricing, I would be very happy to do whatever it takes, providing I make money in the category, right? As long as I’m in positive margins and I’m getting volume growth. I need to balance both these factors. I need to build up sustainable long-term margin-accretive businesses. That’s how I would see it. Right now, Sampann is a lower-margin business, and we are driving top-line growth. I think they’ve got a decent balance. But if we see opportunity to drive it still further by making sure that we’ve got a consumer winning proposition, right? We need to give consumer a clear reason of why Sampann and why not something else. As long as we have that, there is no reason we will not drive it. Today, we have enough on our plate, but we will continue to look for opportunities for growth.
Abneesh Roy
Thanks. That’s all from me. Thank you.
Operator
Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Sumant Kumar
So my question regarding India Food business, despite of portfolio strengthens and the merger of Tata Soulfull and Tata Tea. We have sold only 4% volume growth. So can you talk about what are the challenges we are facing for the volume growth of the newly launched product or and existing products?
Sunil D’Souza
So Sumant, very simply put, the entire India volume story is overwhelming salt story rather than anything else, while everything else provides decent revenue. You have to remember that tonnage comes completely from salt because just as a perspective, it’s probably 1:100,000 sort of or 1:10,000 ratios between the other categories and salt. And I would like to emphasize — I do not think you would have seen in the last, I’m taking a pun here, probably 15, 20 years where you’ve seen a 33% increase in salt. So this has been a very, very unnatural year where we’ve taken these aggressive price increases. Despite that, we’ve grown volume and we’ve maintained/grown share. So I would think that — for that I would commend the team on that. And all that I would say is, if we are seeing stable cost scenarios going forward, and there’s no reason why it should not in a given circumstance, but it changes on a daily, if not on a quarterly basis, then we should start seeing volume growth also come back. Salt, we do believe will come to a mid-single-digit sort of volume growth. LK?
L Krishna Kumar
I thought your question was overall on food. So if you have to look at foods, you have to look at Salt. And Sunil spoke a lot about Salt. But if you move away from salt because you combine Soulfull and other things in your question, right? The rate of growth is much very, very different, right? Sampann grew, I think, over 35% in this quarter. And then, we have Soulfull also growing at 20%, 25%.
Sunil D’Souza
No, Soulfull was triple digit.
L. Krishna Kumar
Triple digit. Sorry, my mistake, triple digit in value terms. And an important part is some of the new launches like Masala Oats has already got double digits or even a high double-digit share in some of the modern trade outlets that they are. So the trending is very good, even though they are smaller, right? And the third part of our growth portfolio is the liquid, right? Thought it’s not part of food size still going to talk about it, which is the NourishCo part of business, and that again saw growth in close to triple digits.
Overall, the growth portfolio grew at about 50%, and we had the same growth rate, I think in the last quarter as well. But these are small today, and hence, when you just look at weighted average volume number, we are not actually understanding the true trajectory of this.
Sumant Kumar
Okay. So why I’m talking about extra salt, can you talk about how is the volume growth when we talk about pulse and resin, how the volume growth happening there because that has a higher contribution in Tata Sampann.
Sunil D’Souza
Yes. So just as a perspective, we are into [indiscernible] double-digit on Sampann and close to a very, very high double-digit growth on Soulfull as well.
Sumant Kumar
Okay. So what is our total distribution now at company level and core business level?
Sunil D’Souza
So if you take individual categories of tea, we are about 2.7 million outlets numeric. If you take salt, we are in the similar ballpark 2.75 million outlet. But if you take the total Soulfull is about, I think, about 300,000 outlets; NourishCo is about 600,000 outlets. But if you take total Tata Consumer total reach of selling any single product, we are at about 3.6 million outlets.
Sumant Kumar
Thank you so much.
Operator
Thank you. The next question is from the line of Sheela Rathi from Morgan. Please go ahead.
Sheela Rathi
Sunil, just your response to the previous question on the distribution. Just wanted to dive more on that front. So first question is, I just wanted to understand how different is the distribution strategy for the foods business and for the beverages business? Because you talked about having different sales force. So that was question number one. And sub-part to that is, you talked about the depth of distribution for Soulfull and NourishCo. But just want to understand what is the scope with respect to the distribution for these categories, say, in the next 12 to 15 months?
Sunil D’Souza
Sheela, very simply put, let me dial back, right? When we formed Tata Consumer Products, we actually created a distribution system from scratch. And that point of time, we built a system, which was designed to deliver synergies, and that’s why we put up I think over a period of time, we came to close to 3,500 plus DSRs, common sales person carrying both food and beverage operating from a common distributor.
Now with that, we have reached individually about 1.9 million to 2 million for tea and a similar number for salt. And in terms of direct coverage, we were about 0.5 million outlets for both, right? So we used to get a multiplier about 4% to 4.5% on each of these categories, the wholesale multiplier. Now what is happening as we are expanding our portfolio, expanding Sampann, expanding Soulfull and even in salt, launching multiple variants, et cetera, is now at the front end, we are seeing that we need to open up bandwidth in case we need to expand the portfolio.
The salesman is not able to sell the whole range, and therefore, we are not able to get depth. And that’s why we still — like I said 2.7 million in tea is not the same as 2.7 million in salt. But total, when you put it together, it’s about 3.6. So we do believe that in large urban areas, now we’ve got the scale and the portfolio to play and that’s why we’re separating it out. We do believe the total 3.6 might not increase dramatically in the urban areas, the 3.6 million to 4 million, I think, will happen more in semi-urban and rural. But in the urban areas, I think now the throughput per outlet, the portfolio and the assortment for outlet is what will get us growth and that is why we are splitting the routes.
Just as a perspective, NourishCo is a totally different ball game because the distribution is ready to drink the outlet and or even the way the product is distributed is completely different, so we kept it separate. It is not part of the system. That is a separate system, which is moving, I think, we’ve moved on about 150,000, 200,000 outlets to about 600,000 outlets now.
The universe, let me just say, if you take a Coke and Pepsi, I’m sure you’ll get the numbers. We’ve got a very, very long way to go.
Sheela Rathi
And with respect to Soulfull?
Sunil D’Souza
Soulfull, I would say would be in a significant portion of our 4 million outlets. For that, we’ve got to — I mean, right now, it’s about 300, it’s about 10, it’s about slightly lower than 10%. But you have to remember, it came from 15,000 outlets just about 1.5 years back, right? So we’ve got it to this level. Now as we expand bandwidth, I think you would see that also accelerating significantly.
Sheela Rathi
And just one more follow-up here. How different it would be for Sampann prices drive the whole distribution strategy?
Sunil D’Souza
So Sampann, actually, if you look at the grocery and the kiryana stores sell very similar products to tea. If I benchmark to that so it should be a 80, 90 index to my tea distribution. Just on the perspective in Soulfull, if I take the other large competitor, we are about 40% indexed to their distribution. So in the short-term, it will be to bridge at least that gap and then drive it beyond that.
Sheela Rathi
Sorry. Just a follow-up again on this one. So what I understand is on Sampann, we have the most opportunity to expand our distribution because of the core. And probably, how far we have reached according to you versus our expectations, say 2 years ago?
Sunil D’Souza
So we are pretty decent. But here is the thing Sheela, I mean if you look at the categories per se, they are present in 80%, 90% of the outlet, but difference is the prices and the type of product that is there in the market is significantly different. My pulses are unpolished, I operate at a slight premium to the local. My spices are differentiated. I operate at a slight premium. My dryfruits are still online, have still not gone offline. But it is a journey of category development and making sure that we do have consumer pull as well as push at the same time to expand.
But you’re right, in terms of a runway, in terms of distribution, I would probably, if I rank it, I would say Sampann is the biggest opportunity followed by NourishCo followed by Soulfull.
Sheela Rathi
Understood. And my final question is, do we see any further business rationalization over the coming quarters or something, both domestically or globally?
Sunil D’Souza
So number one is our overall global simplification, which is already in play, where we aim to reduce from 43 to about 23 to 25 operating entities. The good news is, we just had Tata Coffee NCLT just before this call, and we finished that — shareholders. So we do expect, by end of Q1, that should be kicked in. We have started already moving the different pieces that we can move while this is in progress. So that will be one big piece that you will see.
The second big is, I talked up structural cost interventions in the international space. That is the second piece that you would see. On the India piece itself, I think now we are pretty stable as an organization, there are muscles we need to build, especially in R&D, in digital, expanding distribution in semi-urban and rural, building out analytics, building out RGM, that we will continue to be on a journey.
Sheela Rathi
Understood. Thank you and best of luck.
Operator
Thank you. The next question is from the line of Chanchal Kumar Khandelwal from Birla.
Chanchal Kumar Khandelwal
Hello. Am I audible?
Sunil D’Souza
Yes.
Chanchal Kumar Khandelwal
Hi, Sunil. Thanks for the opportunity. Sunil, if I look at 13% of your business, which is a growth business contributes to 53% of growth. So almost the entire growth is coming from this new business. And you’re building up a couple of distribution strength, I would say, in NourishCo is a different distribution strength than food and beverage are a different distribution strength. So in the building blocks, if you can help us understand, in beverage, let’s take NourishCo, what are the other things you would like to add organically or inorganically? And where are your journey in all the three different verticals? If you can help us also in understanding the management depth you have built on all these three, it will help.
Sunil D’Souza
Chanchal, I like the mathematics about 13%, 50%, I think that’s a good way of looking at it. But just as a perspective, I think the issue is not whether the growth businesses should be growing at 50% or not, they should be. I think the issue is, we need to jump start our India Beverage volume growth and accelerate our India salt growth. So that will change the trajectory. So that equation will change dramatically as we go forward.
Chanchal Kumar Khandelwal
In terms of India Salt and India Beverage business can at most, I mean, correct me if I am wrong, grow 5% to 6% volume, if I look at next 3, 4-year CAGR. This growth business to fire for you to see sustain a 15% kind of growth.
Sunil D’Souza
No, no. So you’re absolutely right. And that’s why we’ve defined our — the platforms that we will operate in very clearly, right? We’ve defined the core. And in the core, the job is to, as you said, mid to high single digits is a very good number in terms of volume growth. And then, there is a ready-to-drink beverages business. There is a Sampann pantry business. There is a pantry business, which is under the Sampann brand. There is mini meals, snacking and breakfast, which is now right now under the Soulfull and a little bit under the Yum side brand. And we just entered the protein platforms, right? So we’ve defined our platforms. Within those platforms, there will be categories which we will play, some of them organically, some of them inorganically.
For example, when I say breakfast, mini meals and snacking. Breakfast is a tick mark, it’s Soulfull. Mini meals, we are sort of about somewhere there. Snacking, we are yet to seriously make moves, right? So we are currently in planning stages, both organically and inorganically. And you’re absolutely right. The idea is to become a large, strong multi-category food and beverage company. So what to do?
Chanchal Kumar Khandelwal
Sure. That answers my question. And just building a block when you are trying to build up the India business, specifically, if I look at the NourishCo or Tata Gluco Plus, I mean, those business will require some additional — the organic, inorganic, the distribution is totally different game. The second part of the question is, I mean given the management attention or management focus on the international business that is, again, you devastated many businesses. What are your thoughts here? How soon you look to build that business or diverge that business because that is a drag for your profitability and also a drag for your management bandwidth?
Sunil D’Souza
So Chanchal, actually speaking, the international business, if I dial back 12 months earlier or 12, maybe 15 months earlier, the international business was accretive in EBIT margins to the India business. It is just this entire commodity currency and demand softness which has seen the trajectory. It’s taken us a bit of work to do but I do think in the next couple of quarters, it should be coming back very strongly to being accretive again to the India business in terms of margins.
Chanchal Kumar Khandelwal
No. I mean, again, taking, stretching it a bit, but the business doesn’t have a pricing power. Correct me, if I’m wrong, the business growth is slower than the India business. And business, we have seen this business history for the last 5, 10 years, you’ve not been sustaining the growth. So I mean, if you can address this and why retain this business, I mean because good period requires but places where we see the commodity inflation, the business seems to not have pricing power?
Sunil D’Souza
So I wouldn’t completely agree with that Chanchal because if you look at results for tea and coffee players across, we have been stressed because of multiple reasons. I do think we can put it back to a bit positive margin. That’s number one. And number two, I also alluded to structural cost actions to make sure that they are rightfully being accretive to our business. So I think it’s not a question of or, I think it’s a question of and, and I do think we can do this. It doesn’t take too much we’ve got dedicated teams out there. So it’s not taking off too much management bandwidth from that perspective. If the India business doesn’t deliver then you can rightfully point the finger but I do think the India business is going to come back pretty quickly. So therefore, I would say it’s [antigen] [ph].
Chanchal Kumar Khandelwal
Sure. Thanks. Wish you all the best.
Nidhi Verma
Sunil, we’ll go to the webcast for a few questions now, okay? So Sunil, there is a question from Latika from JPMorgan. She’s asking, what in your view are sustainable volume and value growth rates for your core portfolio of tea and salt. Should we expect these segments to register mid-single-digit volume growth and high single-digit value growth over the next 2 to 3 years?
Sunil D’Souza
Absolutely. Latika, I think this is exactly what we’ve been saying for a long time and our view doesn’t change here. We should see mid-single-digit volume growth both for tea and salt coupled with pack price, price mix as well as premiumization efforts. We should be high single-digit value growth undisputedly. And history proves us right. Just for example, in the India Beverage space, India Tea, I mean if you look — dial back, it’s been about a 5% volume growth. It’s just that we’ve had so many upheavals in the last 2 or 3 years that the whole category growth has been 3.5. But I do think once we find stability in the entire picture, we will start seeing mid-single-digit growth.
Nidhi Verma
Thank you, Sunil. The next question from her is, could you provide some flavor on margin profile of Sampann portfolio? Is the top-line growth coming at the cost of profitability? Does it imply, you will use the high margins of salt business to build Sampann. What could be the profit margin range for Sampann portfolio on a sustainable basis? If you can’t share absolutely specific numbers, please provide some benchmarking versus the India business market?
Sunil D’Souza
So I would like to make 2 or 3 statements on the overall growth businesses the way you look at it, right? There are two specific ways to look at it. On a gross margin basis, they have to be positive and they have to start moving in the positive — a continued upward positive direction. That’s point number one.
Point number two, as you build scale in these businesses, we might put in infrastructure and/or A&P costs early. And as we get scaled, then we get leverage, and therefore, the total EBIT margins in those businesses will start looking positive. Now Sampann is a lower-margin game than our base businesses. But that said, we’ve been improving quarter-on-quarter and moving it in the positive trajectory.
As we start getting scale as we start building the brands in the hands of the consumers, and we expand our portfolio, move to more value-added stuff. We do expect that this will continue to expand. Just for example, the gross margins in the Sampann Yum-side ready-to-eat portfolio is accretive to my base business. while if you take pulses, it is probably at the lower end, spices would be in the ballpark.
Nidhi Verma
Thank you. And last question from her is, please provide some color on Sampann revenue profile in terms of premiums of pulses, spices, RTE et cetera? And how should one think about revenue growth in profitability mix going forward?
Sunil D’Souza
First of all, I mean, before I get into this, I would also want to emphasize that one of the bugbear for Tata Consumer is our ROCE and Sampann is a significantly high ROCE because there is no capital involved per se. It is completely outsourced manufacturing and distribution. That’s number one. Number two, in terms of revenue profile, it is almost exactly in line with the way the market is. Pulses is the most significant followed by spices. RTE is very small. RTE will continue to be small because just to remind everyone here, RTE, the international opportunities 10x that of the India opportunity. India opportunity is about 150 crores only. And just as a perspective, for pulses 1 lakh crores opportunity.
So India RTE will continue to be small. India RTE would urge you to look at the margins and not the revenue numbers, the revenue numbers will come from international space.
Nidhi Verma
The next question is from [indiscernible]. He’s asking India Beverage market share loss, is it to lose an unorganized players? Or we have lost it to the other large branded players?
Sunil D’Souza
So let me just say the two large branded players, both of them have lost share to the loose and locals. That, in my mind, is a temporary phenomenon, which should get corrected as we go forward.
L. Krishna Kumar
The Tata Chemicals arrangement, there is no change in arrangement, that was the question.
Nidhi Verma
Yes. So there’s a question on the arrangement with Tata Chemicals. And I think as LK have already answered in terms of the agreement there. There is no change. There is another question on, how will NourishCo grow? And is the purchase of Bisleri conflict with Tata from [indiscernible].
Sunil D’Souza
So before I answer this question, I would just like to reiterate what I said in an interview in the morning. Whenever we look at acquisitions, we look at value building. We look at growing our total addressable market as well as growing total shareholder returns. So we are mindful any category like we walk in or anything that we look at inorganically, we have to deliver the right returns to shareholders. I won’t get ahead of myself by trying to comment on Bisleri. All I can say is that we are in active discussions. As and when something materializes, we will definitely come back, explain the rationale for what we are doing, if we are doing it, if it goes through and there are plans for it going forward.
Nidhi Verma
Thank you, Sunil. We’ll go back to the Q&A moderator, if there are any further questions.
Operator
Thank you. The next question is from the line of Shubham Shukla from Voyager Capital.
Shubham Shukla
I’m trying to understand insight —
Operator
Shukla, please use the handset mode. The audio is not clear from your line.
Shubham Shukla
Yes, I kept it. Is it fine now?
Operator
Yes.
Shubham Shukla
I’m just trying to understand like what is causing exactly in fluctuation in currency, like how is it affecting?
Operator
Sir, the line for the current participant has got disconnected.
Sunil D’Souza
Okay. So if I understood the question right, how does currency impact you? That was the question. Currency impacts us both in terms of transaction as well as translation. We buy tea out of Kenya, which is priced in U.S. dollars. The drop in British pounds and our inability to take quick pricing in that market meant that it had a transaction impact. And on top of that, the drop of the British pound versus the Indian rupee meant that there was a translation impact. So currency overall has both a transaction as well as translation impact on us.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Sunil D’Souza
I would just put in a summary about, I do think if you take where we have come from, our businesses are on decent footings. We do have work to do to jump shift our volume trajectory in beverages, and I think we’ve got a very clear action plan in place. We’ve got to put our international margins back to where they were or where they should be. And we have started taking corrective action, including price hikes. We will continue to remain focused on execution, in terms of innovation, distribution, branding, et cetera. Our portfolio expansion is on track. We moved our growth businesses from 6 to 13.
We are focused on cost and efficiency, something that we didn’t talk about. In the last 3 years, our headcount as a percentage of revenue has come down by 100 bps. Other overheads have come down by 130 bps. Our working capital in terms of number of days is down by 60%. Our whole strategy of simplifying, synergizing and scaling is on track, and now we will move to the execution pieces of some of the things that we’ve already put in motion there.
Nidhi Verma
Okay. Thanks, Sunil. Thanks, everyone, for joining us. And if you do have any further questions, you can get in touch with us. Thank you, again.
Operator
Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.