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Ladies and gentlemen, good day, and welcome to Tata Global Beverages Limited Q3 FY '18 Earnings Conference Call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Gaurav Jogani from ICICI Securities. Thank you, and over to you, sir.
Good evening, and welcome you all on behalf of ICICI Securities. From the management of Tata Global Beverages, we have Mr. Ajoy Misra with us, Mr. L. Krishna Kumar, Mr. John Jacob, Mr. Rakesh Sony, and Mr. Ashish Sen. I will hand over the call to you, sir, now.
Okay. Thank you. Good evening to everyone on the call. Thank you for your interest in Tata Global Beverages. Happy to take you all through a snapshot of how quarter 3 and year-to-date looks at the end of our board meeting today. I understand our presentation has been uploaded. So I am basically going to follow that format to narrate the highlights. My colleague, L. Krishna Kumar, will take the second half of what's been uploaded, the financial highlights, and thereafter, happy to take questions and comments from everybody.So the presentation is broadly therefore, the 2 of us will make -- I'll cover the overall snapshot of the business performance. Going straight to the business performance.The key highlights of our performance of the consolidated company figures. The highlights would be that the seventh -- this is the seventh consecutive quarter of operating profits and group net profit growth. It's a function of several things. Revenue from operations is higher in terms of underlying terms on a year-to-date basis. For the quarter, if you exclude Russia, the Russia, which we are not counting revenue from their operations since we exited. If you allow for that, our revenue actually is of 3% growth, which is coming mainly from improvements in India and the U.K. Some of the performance has happened in the non-branded part of our businesses. So it's a plus/minus of these phenomenon.Broadly the -- outside of India, Everyday Black category continues to marginally decline, and the retailer pressure outside of India continues to put pressure on our businesses. On the commodity side, there has been softness in Indian tea prices, but the African tea prices for the Tetley brand has been impacted because of an increase, also compounded by the Brexit effect. Coffee prices continue to be volatile, but of recent times, it's reducing from the previous high.There has been significant improvement in profit before exceptional items and group net profit, largely because of several things, not insignificantly because of very good cost management that has begun to kick in after many of the cost restructuring programs that we had set off and driven through the year. There has been also lower finance cost. And there has been some phasing of advertising expense. Those are all factors that are part of this phenomenon. There have been currency market impacts. If you have any -- you all must be familiar with that. There is, from our side, an increased focus on underperforming businesses and operational efficiency. You must be following the fact that we had stated quite some time back that we will put many of our noncore businesses that we are not able to turn around in a short time or a decent time, and loss-making businesses and marginal businesses, that we want to get more focus into driving growth in the company by restructuring our portfolio. So we have been looking at businesses in that light. The recent restructuring that you must have followed is our exit from our B2B business in China that was a drain on our profit. We restructured Russian operations by, in effect, not directly operating the business there. Those are some things that you must have already seen. Thereafter, in terms of noncore businesses such as our plantation partnership in Sri Lanka under EMSPL, we have divested our holding in that plantation performance, a company. Also, in this quarter, the results as part of highlights, there has been the benefit of the new tax rate structure that has come into place in the U.S., so that is also part of this whole financials.All of that has led to, as you can see on Slide 5, a snapshot of consolidated financials of quarter 3, thus total operating income, like I mentioned, 3% up in underlying terms. Profit before exceptional items are up by 50% from INR 146 crores to INR 218 crores. And our group consolidated net profit is up by 31% to INR 189 crores in the quarter.In terms of our year-to-date, our total operating income is up by 2% in underlying terms. Our profit before exceptional items is up by 25%, and our group consolidated net profit is up by 20%. So it's been a strong performance on a 9-month year-to-date basis.Geography-wise, India, which is a very significant geography for us. The performance update in the branded business is that there has been a sales improvement for both the quarter as well as year-to-date. Good growth in sales, especially post transition to GST. We've maintained volume leadership in tea, with growth in market share. We benefited somewhat by a benign commodity cost in tea. We've made several new launches recently, many of them are showing very encouraging signs. To name a few, Tata Tea Masala Chai was launched during the quarter. Our Tata Tea Elaichi continues to grow at a robust pace. Our Tata Coffee Grand has introduced a new Hot Tea Shop variant and a Roast and Ground variant, which are adding to the top line. We've also opened a pilot tea retail project -- pilot store as of -- in Bangalore called Tata Cha. It's an Out of Home initiative. We are studying the KPIs. It's been a very interesting experiment. Fruski is our first entry into the ready-to-drink market in India. It's a green tea based herbal, ready-to-drink product. We've done a pilot launch in the Delhi and NCR regions.Moving from India to the U.K. We continue to grow market share predominantly nonblack category, which is where the growth potential in the current and future will be. Green Tea continues to grow with improvement in Super Greens Tea that we've introduced some time back. These are fortified teas. We are seeing good growth coming back into Teapigs, our super premium tea brand. There has been a category decline in everyday black tea, so that continues to put some pressure on us. We've also, in the U.K., entered a new category, which is the Super Squash category, with the Tetley brand name. It has hit the shelves in major multiples just recently. And Tetley was also awarded the Foodservice Brand of the Year 2017 at the Wholesale Distributor Gold Medal Awards in the U.K. recently.In terms of U.S., top line improvement in branded coffee on a year-to-date basis. We had renegotiated the Keurig contract, and that benefit of Keurig K-cup is coming into to our top line now. We also had secured a good order of private labels, which is also adding to our sales numbers. There has been an improved performance in our Tetley Super series that we have introduced in the U.S. market based on our success in the U.K. market. And our food service business in the U.S., Empirical, continues to add to the top line and operating profit. So those are the businesses in the U.S.Canada, where Tetley is the #1 brand. Stable top line performance, though aggressive competitive intensity is continuing. We continue to maintain volume and value leadership in that market. We've had a couple of new launches during that period, something that the Canadian market does very well and keeps Tetley refreshed as a brand. We want -- we've launched a Tetley RTD there.Rest of EMEA has been -- has shown a stable growth.In the Non-Branded business, many of you would have seen the Tata Coffee results. There has been softening performance in both coffee extraction as well as the plantation business. We have an instant tea business in TGB. That continues to be stable and profitable. In our associate companies, there had been good performance across all the associate companies in this period driven by high volumes and improved realization. I mentioned that we had pulled out from our investment in EMSPL during quarter 3, the Sri Lankan plantation company.In terms of our JV businesses, happy to report that Tata Starbucks continues its very robust profitable growth, profitable at store level and also nearing breakeven very soon, after royalty. Double-digit top line growth, better in-store performance at Starbucks. In terms of NourishCo, sales continue to grow, driven by double-digit growth for both Tata Gluco Plus and Himalayan. And, for the first time, we've achieved breakeven during the year, so that's really good news. These are 2 joint ventures into which we were investing over the last couple of years, and we kept telling the market that these are investments that we are very confident will stand us in good stead, and these investments are really investments for the medium and the long term. I think we were right at the medium-term part.Middle East is stable.Bangladesh, base being very small, but spectacular growth. And we are now, for the first time, brought Tata Tea brand alongside of Tetley. And we have launched the Tata Tea Gold, a blend that we've created for the Bangladesh market.In terms of strategic priorities, our focus is on continuing to ensure and secure the base business. Then our focus is on innovation, and new product launches continues to drive the additional improvement in sales. I mentioned the incubatory business is showing improved performance when I was talking about our JV. And some of the divestments in non-core businesses will continue to take our priority and focus and attention.With that overview, let me hand over to LKK. He'll take you through the financial overview in more detail.
Thanks, Ajoy. And good evening, everyone. I'll just run through a few highlights of the financial performance. As Ajoy mentioned, it's been a quarter of strong profit growth. A seventh consecutive quarter of operating profit growth.The operating income increased by 3%, adjusting for the fact that we exited from Russia during this quarter. The Indian business, however, grew much stronger. The total income increased by about 9%. Growth in Indian brands was a little over 7%. It was also a good quarter for the U.K. business on a quarter-on-quarter basis. And we were led down, to some extent, by the non-branded businesses, and that is the extraction and plantation businesses of Tata Coffee. Part of it was due to what's happening to coffee prices. There was also some adverse impact of pest and weather in the tea part of the tea plantation business. We hope some of this will turn around in subsequent quarters.Coming to the profitability. I think profitability improved, and in fact the operating margin went up by about 2% to 3% compared to the same period in the previous year. It was helped by lower commodity cost and better management of commodity cost, including coffee hedges in the U.S. Overall, cost of lag, we have taken a lot of initiatives to restructure cost, as we have been talking in the past. Finance cost is lower. And there has been some phasing of advertising issues. Remember that the advertising expenditure for this quarter did not include any spend on Russia, which could have been there in the previous quarter. Plus there was also a fair amount of product launches in the same period last year.We had an adverse impact in the U.K. because of Brexit, and we managed the cost pressures on Brexit fairly well. Notwithstanding there was impact of cost pressures in currency in the U.K., we have come up with a good profit performance.Exceptional items, you will see a net cost in the numbers for the quarter. There are 2 elements. There is the profit that we've made on sale of our stake in plantations in Sri Lanka, which we had earlier announced. There is also some restructuring cost relating to ongoing cost restructure, including outsourcing of some operations and restructuring some of the organization structure. Some of these benefits will come in the following quarter. So one-time cost is reflected in the current quarter.In the tax rate, you will find that the effective tax rate is much lower than you have seen in earlier quarters. This is arising out of a reduction in the U.S. tax rate, which I'm assuming all of you are familiar, and the Eight O'Clock business had the benefit in terms of restatement of deferred tax liability. There will always be a continuing impact of the lower tax rates on the business of Eight O'Clock and the U.S. business in general.So that's the P&L in terms of the OCI. There is a gain because of reevaluation of some pension investments, otherwise, largely, the plantation impacts arising out of currency movements.Looking at the breakup of revenue from operations. You will see that in underlying and in rupee terms. CAA slightly below the same period in the previous year. EMEA is significantly lower, but part of that is due to the fact that in the Russia business, which was there for the full period in the previous, is not there in this quarter. Indian brands continue to grow. And the non-branded operations turnover is slightly lower for some of the reasons I'd earlier mentioned.Moving on to the segment performance. You will see that in terms of segment revenue and profitability, the tea business had a great quarter. Coffee, though slightly lower in revenue terms, had improved profitability, driven also by good commodity cost management.So those are some of the highlights. The last slide relates to share performance. And I guess everybody on the call is familiar that we've had a good performance of the share price and have delivered good return to investors. So broadly, that's the performance, and we're happy to answer any questions that you may have.
[Operator Instructions] We will take the first question from the line of Sameer Gupta from India Infoline.
Two questions from my side. One is just a clarification. So your -- in your standalone statement, I see that you've booked an exceptional gain of around INR 105 crores from divestment of stake and associate. But that same thing is coming as only INR 29 crores since consolidated. So just wanted to understand why there is a divergence?
The consolidated, we keep accounting the share of profits belong to us, so the investment value would be different. Hence the profit numbers are lower in consolidated compared to standalone.
But the investment value would be same, right? In both...
I think it's a conceptual question. I think, let's move on. I think the original investment value will be the same, but over a period of time, we keep accounting share of profits or losses. As the case...
Got it, got it. And sir, one more thing, your gross margin in India business, this has seen some serious expansion in the last quarter and even this quarter. And this quarter, we've indicated around that the tea prices have started to firm up. So just wanted to understand why we're seeing continuous gross margin improvement here?
I think we are managing commodity costs well. And I am not going to comment on quarter-on-quarter variation. But overall, I think, it's a soft commodity cost and good commodity cost management. It's a bit of both. But for us, quarter-on-quarter variation, we don't want to comment specifically. But overall, the margin trend is certainly improving in the Indian business.
And sir, just wanted to understand, then this is like a sustainable trend going forward?
I mean, to some extent, it depends on -- I don't think we can comment on it. Depends on commodity prices, it depends on mix. But if the environment continues to where it is, then certainly it is sustainable.
We will take the next question from the line of Manoj Menon from Deutsche Bank.
Couple of questions here. One, on the U.S., the Himalayan water entry, which you had made [indiscernible] about 3, 4 months back. Just trying to understand, while I understand that it's an independent venture for you, is there an opportunity to use the Pepsi distribution or maybe NourishCo, extending it a Q further and using that? And secondly, what's the broad medium-term top process on ramping it up, the Himalayan water, just specifically in the U.S. geography?
So to your first part, we looked at all the possibilities of who could be our go-to-market distribution, sales and distribution partner, because this is a liquid distribution play, and where is our existing businesses is an [ ambient ] play. So we looked at various options, and we think we have got the right and appropriate partner in Talking Rain, who has built a very good distribution system for their Sparkling Ice product. It's been one of the most spectacular companies in that sense in terms of what they have achieved. They are hungry. They are eager. And I think we've built a very good partnership. So that's how we are taking it to market. Your second question was about Himalayan brand beyond the U.S. Well, we continue to do one thing, one step at a time. After India, we had done a pilot with taking it to Singapore. We learned many lessons there. And that -- we used Singapore as a pilot. They are, after all, the world's biggest market for source water and a market that pays you the premium for being a source water, and for that source water being transported all the way is the U.S., and it's growing. So instead of playing with smaller markets, I think we decided it was time for us to take the big leap. So that's why we're focusing on America right now.
Understood, understood. Secondly, on the non-core geographies stroke, [ non-crore ] businesses, while China and Russia has been divested, are there more non-core in the pipeline, which you may be able to comment, any of these geographies which are material from a drag point of view? Or you believe there is better value capture outside your system?
So obviously, we can't talk about something that we have not consummated. But I think we have consistently been saying that we will continue to put such parts of our businesses in sharp focus, but we're not going to just keep exiting for exiting sake. We will make good attempts and good efforts and good plans to make sure many of our businesses become profitable. But wherever they are not, we will look for restructuring creative options. So that process is an ongoing process.
Okay, okay. Understood. And lastly, on the India tea business, anything which has changed, like demonetization or GST or any of the other macro changes resulting in a slightly better growth for the organized part of industry where you are the market leader? And secondly, historically, your India volumes, if I remember correctly, has grown at around 4% to 5% CAGR. I'm talking about the last 10, 15 years. I'm not looking for a guidance here, but in real medium-term, 3, 5 years or even longer, can the volume growth in India be better than, let's say, the last 15 years?
Well, certainly, if you look at recent figures, we certainly are seeing an effect after post GST and demonetization. We think there is some -- you are aware that roughly half or 45% of the total tea consumed in India is unbranded. So we think there is some shift happening there. But we'll have to wait and watch and see what -- where it settles down at.
We will take the next question from the line of Pritesh Chheda from Lucky Investment Managers.
So if you could give some color on the volume growth rate in India for the first 9 months? And correspondingly, the volume growth rate in the U.K. part of the business?
No, I think, as we said, India, I think we have seen better volume growth for GST, and I don't think first 9 months will be reflective, because all of us know that there was a period prior to GST when there was aberrations in the market. But we can say, post GST, we have been growing at high single digits and in a month in double digits.
Okay. And my second question is bit of bookkeeping. Quarter 4 of last year, was there any one-off in the JV, profit from JV or consolidation, because the numbers are [ quitely ] -- starkly different from the 9 months of last year. And what could have happened for the full year?
Which number are you referring to? Sorry, repeat your question again.
So the profit from the JV and associates, that line item? Hello?
Go ahead.
Yes. So if you see that number is minus INR 9 crore for the full year, last year, but if you see for the 9 month, it is a INR 24 crores plus number. So in the quarter 4, was there any one-off adjustments?
One second, one second. You are comparing full year versus 9 months, is it?
Yes.
What happens is, I think, I mean, I don't remember, but conceptually what happens is, the North Indian plantations, which is one significant part of our JVs and associates, right? There is virtually no growth in the last year or very marginal growth. So all the North Indian companies declared losses in the last quarter. So impact of that is most likely in the region.
Okay. And this is the line item where NourishCo and Tata -- the Tata Starbucks will also be in the line item, right?
Right.
And in the initial comments on Starbucks, did you mentioned that it is EBITDA positive?
Yes, I mean, we said it is -- we are -- yes, it is positive, we have said that -- yes, it is then turned positive directly is what we said. We didn't give a number, but yes, both companies have become positive.
NourishCo and ...
At the operating level.
At the operating, which means it generates cash flow now to fund its expansion?
I'm not commenting on that. It depends on the pace of expansion. If you want rapid expansion, the way some analysts are comparing, then answer is probably no. But I think what is important is that we're seeing good growth, and we're seeing high double-digit growth. We are seeing profitability compared to investing in the business, right. Further investment would depend on pace of growth, new initiatives, various other things.
Okay, and my last question is, on the coffee side of the business, especially, the Eight O'Clock side of the business, what kind of margin levers are possible there?
I don't know. In terms of margin levers, I'm not able to comment. It is impacted to some extent by commodity cost. But as we said, there will be some impact of the Keurig arrangement which we have been talking of. And you will start seeing the impact of the restructured Keurig agreement, not only in margin, but potentially in top line as well, a little bit in the next quarter and certainly in the next year.
We will take the next question from the line of [ Devang Lakhani ] individual investor. Okay, it seems he has mistakenly been placed on hold. We'll move to the next question from the line of Arjun Suri, Individual Investor. Please go ahead.
I just wanted to ask you, what plans you'll have for the cash you are raising from the sale of your non-core assets, hello?
We certainly want to expand, and we will share about our plans over a period of time. [indiscernible] make an announcement. And the overall objective is usage. Now that we are doing a fair bit of work and have done a fair bit of work in cost and restructuring, I think the focus now will shift on growth. And you will -- we will come back to you on how we are using the cash to fund growth.
Okay. And how do we see the interest cost panning out in the next few quarters?
Sorry, I'm not giving out [ overtime ] strictly [indiscernible].
We will take the next question from the line of Indira Badrinarayan from Morgan Stanley.
Just a couple of questions on the international EOC business. Even on a constant-currency basis, the reported revenues are down about 2%, and of course, the implied reported numbers are down 6%. So I mean, this quarter was supposed to reflect the revenues also from the renegotiation of the Keurig agreement. Am I correct?
I just now said that you will see some impact next quarter and more in the next year.
Okay. So I mean, has there been some challenge in the underlying other businesses also? Some continued pressure in the international coffee business?
I think in every international business, the competitive intensity is fairly large. And there is no denying that. And we've always been saying on a quarter-to-quarter, it's difficult for us to comment. And we've been saying a particular quarter could get influenced by the fact that one large customer decides to do a promotion, or he did a promotion in a previous quarter in the same year. These kind of issues come in comparison. But yes, competitive intensity is higher, and recent pressures have had some impact, not only on us, but also on other players in the coffee market.
Perfect, that's very clear. So going forward, the renegotiation of Keurig is likely to benefit your overall numbers. Secondly, on the margin for this business, I understand that the commodity prices have been not very supportive, but the company still managed to report very strong operating profit numbers. Is there anything that you can probably -- are you doing differently, any change in strategy, et cetera in the international business?
We only said that some of the coffee commodity hedges, this time, have worked out well in this quarter. But just like in -- on any currency hedge, commodity hedges, we are lucky sometimes; sometimes it can go the other way. But so far, we have managed commodity cost well overall.
Understood. And similarly, like, I mean, I know you mentioned this, that commodity prices and commodity management has benefited gross margin in the domestic business also. But apart from that, is there any underlying mix improvement, your new launches? I mean, are they higher gross margins? Are those doing well? Is there any color that you can provide on that?
I think there is an element of mix. But I'm not able to separately quantify. But that won't be the larger proportion. There is certainly an element of mix.
Understood. And just the last question on the tax rate. I know you mentioned that the tax cuts in U.S. business have benefited, but the tax rate is at 9% for the quarter. Is that the only lever that has impacted the tax rate this -- to be so low?
It is a substantial lever, but there could be some other items as well. It depends on the mix between different countries. For instance, if the profitability in the U.K., it's a mix of different countries. So one thing is the tax rate in the U.K. has been coming down, so if the profitability in the U.K. is better, then that would have an impact on the overall tax rate. But it's a function of various things, but I think the most material number is the U.S. tax rate reduction.
So could -- is there any number that we could work around with the tax rate for the full year fiscal '18?
No, sorry. We -- for the fiscal year, again, we are -- I think we just have to -- you have an idea of earlier tax rate. I think...
Correct, correct. And there's a substantial difference in this quarter. That's the reason why I ask.
So I think, going forward, if you have your way of working the numbers for EOC, then on the profits for EOC going forward, you would apply lower tax rate and see what it does to the effective tax rate. So...
We will take the next question from the line of Akash Jhaveri from Fortune Financial Services.
I just want to ask for tea, India tea business, which you mentioned accelerated post GST. Is that because for category expansion, so organized taking share from unorganized? Or is that within organized, some of the smaller players which are there, we've have been able to expand market share at -- along those lines?
I think there is a fair bit which is also due to overall demand growth, which we are seeing, and I think many of the FMCG companies are seeing. So there seems to be a pickup in underlying demand growth, not so much a share. There is an impact on share. But I think -- like demand growth is stronger. Ajoy, do you want to...
No, that covers it.
[Operator Instructions] We have the next question from the line of Varun Agarwal from Pioneer Investcorp.
Sir, my primary question was that Mr. Ajoy Misra, sir, had mentioned that there will be focus on [indiscernible] in which I would like to ask that there was a mention in the newspaper a few days back that there are 2 buyers interested in discussions for the India plantation businesses. So is that happening soon, or is it going to take time? And if it doesn't happen, what is the next course of action?
I think you have to ask the further people who have wrote -- written the article. So we have also, I think, given our response, which has been published, right? So we will continue to explore any different options. So we have no specific comments to make.
We will take the next question from the line of [ Sourav Padar ] from Lucky Investment Managers.
Just wanted to ask you, can you give us a number -- revenue number for Starbucks? Hello?
I think by the time they file their statement at the end of the year, you will get it. But if you have the last year's number, I think you could estimate given the fact that I think last year at this time, we were about 91 stores or something, and we are now about 106. And most stores are showing a very good comp, which is a same-store sales growth in double digits. So...
I think we will have a run rate somewhere between INR 300 crores to INR 350 crores and growing fast.
Okay. And so a follow-up on Starbucks, can you -- so we have a total of 106 stores now. What is the square footage under the Starbucks brand?
Sorry, we don't have a number for the square footage.
Square footage means?
In a sense of overall [indiscernible].
Revenue per square foot.
No, no. We have very different formats that we are operating in. We are experimenting with smaller formats. We are operating with large, [ high-street ] stores, mall stores. So...
What I was trying to ask is the footprint in the sense of square footage. What is the footprint of Starbucks across 106 stores?
We don't have that data. See, we don't -- for us it is not a metrics we monitor. That is the reason why we don't have it.
We will take the next question from the line of Vicky Punjabi from JM Financial.
I just had a quick question on this coffee segment. The coffee segment EBIT has doubled from INR 30 crore to INR 63 crores, while the Tata Coffee consolidated EBIT had actually reported a decline of 6%. I wanted to know, what was driving this? And was it largely on the account of divestment of Russian operations?
You'll see profits being better.
But then that should be included in the Tata Coffee consolidated results, right, sir? I mean, I [ thought ] in the EBIT and the consolidated result had declined 6%.
To Russia exit.
Yes, the Russia exit.
We will take the next question from the line of [ Avinash Palla ] individual investor.
I just want to congratulate you on the standalone business. But sir, if I compare the standalone profit before tax and the consolidated profit before tax, the incremental profit that comes from the consolidated is less than INR 100 crores, right? The standalone profit before tax is about INR 524 crores and the incremental consolidated turns around INR 600-odd then crores. I just want to understand then, the overseas business is, you know -- why is it that the incremental contribution is so low? Or the group [indiscernible] in their consolidated numbers?
So I think you're just comparing. It is not like-to-like because there are intra-group transactions. And the -- some of the income in the standalone will also include dividend from overseas operations. So you can't just make that comparison without these adjustments.
All right. Sir, and the second thing I wanted to ask you is that you had piloted certain ready-to-drink in India. If you can share any -- if you report observations on these products. Is there a positive increasing, or maybe you can throw some light on this?
Fruski. Are you talking about the Fruski pilot that I referred to, the ready-to-drink green tea based drink we piloted in Delhi and NCR region?
Yes, sir.
Well, we are testing the graph of the waters in terms of market for ready-to-drink ice tea, if we use green tea as a base this time. This time meaning in this particular pilot. We targeted the Delhi and NCR, because we wanted to concentrate and set up those KPIs that we wanted to hit, to test whether our proposition and all of those KPIs are met. I think so far what we are seeing is, it's been a very successful pilot. There are some learnings in terms of products and some tweakings. So at this point, I think, we are very satisfied with it. That's what I have to report right now.
So nothing like, no plans for a larger rollout within the next 12 to 18 months at this level?
Nothing that I can share with you. But, of course, internally, we are working on the next steps.
We will take the next question from the line of Pritesh Chheda from Lucky Investment Managers.
Just a clarification on the tax rate. So is this, the quarter 3 tax rate, is a tax rate which you have to take it forward until the tax regime changes?
No, no. There is a one -- as I explained earlier in the call, there is a one-time impact which is reflected here, right? So I don't think you can take this quarter's tax rate going forward. But if you have been following the company, you probably know what your own estimate of the tax rate in the past. Then either based on Tata Coffee's results or otherwise, you have a split for Eight O'Clock. So on the Eight O'Clock portion of the profits, you have to assume a normal tax rate of about 21% or thereabouts compared to 35% earlier, right? So there is roughly about a 1/3 reduction in tax rate. So that -- on the U.S. portion, you need to apply lower tax rate. And recompute your effective tax.
Next question is from the line of [ Devang Doshi ] from Asian Tiger.
Sir, as we witnessed, Starbucks is doing good. Are we intend to expand in, I mean, from 106 stores to number of more stores in the coming quarter or something like that?
Yes, we -- our plans are to continue growing. We are -- I think we've hit up all the metrics. We've had all the learnings. So yes, of course, looking forward to a robust growth.
What kind of store you're looking to open in coming quarter or maybe coming year?
We've, like I said, experimented with various formats. And if -- there is a lead time, so we have many of our stores' development work in the pipeline. And our efforts are to try and see how fast we can bring them to fruition. I think we've talked about in the recent past that from 6 cities, we are now moving to the seventh city, which is Calcutta. So we continue to work on our plans for growth.
We will take the next question from the line of Anubhav Sahu from MC Research.
Sir, I had a very specific question regarding the restructuring. So if the scope of restructuring can possibly go beyond the current domain of Tata Global, that is something. I mean, some segments from the Tata Group, say for some Tata Chemical, can also be considered under the restructuring scheme? Any thoughts on that?
So that's not for the MD or ED of Tata Global Beverages to comment on. So...
[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Yes, so thank you. I think -- and thank you for the interaction and the interest from all the callers on a day when they must have been otherwise glued to other macro news. But yes, we've had a good quarter. And we will continue to work on our strategies. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call for today. Thank you for joining us. And you may now disconnect your lines.