Tata Consumer Products Ltd (TATACONSUM) Q3 FY22 Earnings Concall Transcript

Tata Consumer Products Ltd (NSE: TATACONSUM) Q3 FY22 Earnings Concall dated Feb. 03, 2022

Corporate Participants:

Nidhi Verma — Head of Investor Relations & Corporate Communication

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Ajit Krishna Kumar — Chief Operating Officer

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

Analysts:

Mr. Anirudh Joshi — ICICI Securities — Analyst

Abneesh — Edelweiss — Analyst

Sumant Kumar — Motilal Oswal — Analyst

Percy Panthaki — IIFL — Analyst

Jaykumar Doshi — Kotak — Analyst

Nitin Shakdher — Green Capital Single Family Office — Analyst

Alok — Ambit Capitalq — Analyst

Ekta Sanghvi — Vallum Capital — Analyst

Shirish Pardeshi — Centrum Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Tata Consumer Products Limited Q3 and nine Months FY ’22 Earnings Conference Call, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anirudh Joshi from ICICI Securities. Thank you, and over to you.

Mr. Anirudh Joshi — ICICI Securities — Analyst

Yes. Thanks, Stanford. On behalf of ICICI Securities, we welcome you all to Q3 FY ’22 and nine months FY ’22 results conference call of Tata Consumer Products Limited. I will hand over the call to Ms. Nidhi Verma, Head of Investor Relations and Corporate Communications for the introduction and initial overview. Thanks, and over to you, Nidhi.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Thanks, Anirudh, and Hi, and welcome, everybody, and thanks for joining us today for the Q3 call. With me, I have Mr. Sunil D’Souza, Managing Director and CEO; Mr. L. Krishnakumar, Executive Director and Group CFO; and Mr. Ajit Krishna Kumar, COO. Like we do usually, what we’ll do is, spend about 20 minutes or so walking you through some of the key highlights of the quarter and then we will open the floor for Q&A. In terms of the agenda, Sunil will walk you through the summary, the progress we have made, again, some of our strategic priorities and some of the business updates during the quarter. LKK will walk you through some of the financial performance update and then we will open the floor for Q&A. So without further ado, over to you, Sunil.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Thanks, Nidhi. I will go straight over to the executive summary. So if I look at Q3 of this year, during the quarter, our consolidated revenue grew 6%, excluding the International Foodservice business exits last year, bringing our two-year CAGR to 13.4%. Overall, India business had a good quarter, grew 6%. India Beverages business growth of 1%, with 6% volume growth. India Foods up 16%, with 4% volume growth. International business grew 2%, negative 1% in constant currency terms, cycling an elevated base. You have to remember, Q1, Q2, Q3 were COVID lockdowns, etc, they’re still prevalent, especially Canada, parts of the U.K., etc, and we’re cycling those numbers. We’re now coming off those numbers. Now, India Beverages, volume momentum has improved month-on-month, 5% volume growth in tea during the quarter. Again, I would point out that record Q3 that we had last year, and therefore, our two -year volume CAGR is 8%. We have also seen strong volume growth across Sampann, which grew roughly 39% and NourishCo, which grew roughly 100% plus in volume terms.

With tea inflation tapering off, we’ve seen strong improvement in India Beverages EBIT margins — gross margins, and therefore, EBIT margins have jumped up significantly, 1,100 plus basis points year-on-year. On the Foods business, however, inflation across the portfolio and investment in new businesses, specifically we’ve got two businesses, Soulfull and Tata Q, which we did not have in the base last year, these have impacted the India Foods margin. Now, it’s a volatile demand environment and we do have inflationary headwinds, and therefore, we will dynamically manage all lines of the P&L to mitigate this going forward. Now, despite the volatile demand environment, despite the fact that we are cycling a very strong base quarter and the fact that we are facing inflationary headwinds, despite all that, our EBITDA margin for the quarter was up 270 basis points to 14.6%, improvement even versus the last quarter. We continue to invest behind our brands. A&P in the India business is up even this quarter by 19%. In line with our strategic priority of exploring new opportunities, we acquired Tata SmartFoodz Limited, the owner of brand Tata Q.

This will enable us to expand our portfolio in the higher margins, value-added, convenience categories and to cater to the growing consumer need for health, taste and convenient food offerings. In addition, we have transitioned our Australia business from a direct distribution into a distributor-led, which will, not only expand reach, but also give us cost efficiencies. In terms of performance overall, as I mentioned, just to recap, 1% revenue, 6% volume in India Beverages; 4% volume, 16% revenue in India Foods. US Coffee, we’ve seen unprecedented cost inflation on coffee as a commodity, and in line with that, we’ve taken price increases. More of that when I come to the details, but negative volume of 2% and constant currency growth of 6%. International tea, again, this is a reported number of negative 7%. If we net off the divestments, it is negative 1% and constant currency growth of negative 5%. Tata Coffee, strong results 31% volume, 34% in constant currency growth, all in consolidated, our constant currency growth of 4% netting up to INR3,208 crores.

For the nine months cumulative, India Beverages volume up by 4%, revenue up 13%. India Foods, strong performance 12% volume, 19% revenue. US Coffee negative 6% because they’re cycling the pantry loading of last year, especially in Q1, Q2 negative 6% volume, negative 3% revenue growth. International tea, again, pantry loading coming off negative 5% constant currency revenue, as well as volume growth. Tata Coffee 7% volume, 12% constant currency revenue, all-in 7% growth in consolidated at INR9,250 crores. At a glance, growth year-on-year 6% at INR3,208 crores in revenue, EBITDA up 28% to INR468 crores, margin expansion to 14.6%. PBT INR401 crores, up 34%. Margin expanded to 12.5%. Group net profit up 22% to INR290 crores, margin up to 9%. And we are holding INR1,891 crores of cash, this is despite paying off some eight O’clock loans in the U.S., higher dividend, investments behind some of our associates and subsidiaries and investments behind other businesses like Starbucks. nine months revenue INR9,250 crores, EBITDA INR1,290 crores, 3% growth. PBT up to INR1,105 crores. Group net profit negative 9% at INR776 crores and INR1,891 crores of cash.

Now, just to recap, we have defined six strategic priorities: strengthening and accelerating our core business; driving digital and innovation; unlocking synergies and focus on costs; making sure we’ve got the talent and capabilities and building a future-ready organization; exploring organic and inorganic new opportunities and embedding sustainability in everything that we do. Now, just to give you a perspective of the core, we’ve started ATL on Agni after a long time as we move up the brand up the value chain. We’ve used the Indian Hockey Team to come up with the ad, which has been extremely well received. We continue our focus on growing our highly profitable business down south with Chakra. We’ve launched a new TVC on Chakra Gold, as well as being sponsors of Bigg Boss Tamil Season. As the tea prices — tea costs come down, you will see the India Beverages EBIT margin coming back and it’s come back quite strongly. Our focus on expansion, premiumization and — is bearing fruit. Coffee volume, still a small base from what we expect is up 65%. Our expansion into moving beyond just our base tea and offering value-adds, Tata Tea Gold as a percentage has moved to 5.2%.

So Tata Tea Gold Care as a percentage has moved to 5.2% of Tata Tea Gold. And we continue to gain market share close to 90 basis points for the quarter. Same thing in salt and Sampann salt, we continue to focus on premiumization. During the quarter, we’ve launched Tata Salt Superlite, which is 30% less sodium. Just to recap, we’ve got Tata Salt base, we’ve got Tata Salt Lite, and now we’ve got Tata Salt Superlite. Poha has been a huge success, because we are probably the only branded national players playing in this category. And we’ve seen huge volume momentum. Tata Salt very clearly between August and December, we took a 15% price increase to mitigate the various cost impacts that we saw in the category. We did see a bit of channel down-stocking, I would call it, between October and November, but December has bounced back and we’ve registered the highest volume in FY ’22 in December. Sampann, huge focus on expansion of Sampann, paying off 39% volume growth in Sampann in Q3 and we continue to go from strength to strength in Tata Salt.

Overall Salt share, including our entire portfolio, up by 476 basis points during the quarter. Now, innovation is the other big focus and we’ve had a slew of launches during the quarter. We’ve started a pilot of online-only dry fruits, a range of cashews, pistas, almonds and raisins, great response to that. The next steps is to figure out supply chains and expansion, launching value-added differentiated propositions in coffee, launched Quick Filter under the Tata Coffee brand. Filter coffee, which gives you the — which you can make with the convenience of instant. Soulfull, now that we are covering about 150,000 outlets on a three-month basis, we’ve got the reach there. Now, we are through-putting the portfolio. We’ve launched the No Maida Choco in a INR10 pack, specifically targeted as expansion into GT. And as we moved up the salt — Tata Salt base prices in line with maintaining margins in a inflationary environment, we are making sure we are covering the bottom end, so we’ve just launched Shuddh by Tata Salt in specific markets to cover the price points, which we are vacating as we move up.

Continuing to focus on innovation, 1868, our online only D2C brand, we’ve expanded our offerings out there. We’ve expanded the portfolio in Agni with the launch of Adrak Chai. We did it end December, early January. Again, great response to this product. And in line with making sure we’ve got a mass premium brand between Tata Copper Water and Himalayan. We’ve launched again in very specific geographies Tata Nature Alive, which will play the mid-market play in the water business. Tata Q is a strategic addition to our portfolio in line with exploring new opportunities. We acquired Tata SmartFoodz in November. They have state-of-the-art differentiated MATS technology. And in addition, they have got great in-house manufacturing and R&D capabilities, which would enable us, not only to capitalize with the current portfolio on emerging consumer trends and growing demand for wholesome convenient and trusted items, but it gives us the expansion to expand our existing portfolio and leverage the technology to create a strong pipeline of value-added products in our Foods business.

The category is expected — right now it’s a relatively smaller category in India, more in international markets. The good news is the markets, which are big for Indian ready-to-eat products, match with the footprint that we have in Tata Consumer Products, namely, U.S., U.K., Canada, Australia, and therefore, we see a sizable opportunities in international markets as well. In addition, we achieved synergies coming into play, capitalizing on our strengths in modern trade and e-commerce and, of course, I talked about the international footprint. Now, there is significant scope as we integrate this business to unlock synergies across procurement, manufacturing, logistics, among other functions and more about that in the coming slide.

I’ll request Ajit to run through the slide.

Ajit Krishna Kumar — Chief Operating Officer

Sure. Thanks, Sunil. I think this is our third integration that we’re doing at TCPL after the Tata Chemicals Food business and Soulfull. I think, as a company, we have developed good capabilities to absorb M&A, particularly problematic M&A. For us, the intention here is to — for us — we’ve started the integration of Tata Q soon after the announcement in November and we are substantially complete. What that means for us is, we minimize the friction between the organizations, we maximize the efficiency and maximize leverage on our common assets. A couple of highlighted on this page, I think S&OP, etc, has been largely harmonized. I think the other critical part has been as we hope to grow the business, we are looking to leverage on our distribution network, both domestically and internationally. The integrated organization structure is already announced. Most of the other processes are underway, and I think in another month or so, we will substantially complete and this will become an integral part of the organization, able to maximize synergies from the fixed cost base from our own base.

I think the last part is the — as Sunil mentioned, we have also acquired the facility in Sri City. We intend to also use that to leverage for our foods portfolio, maximize cost savings and to also look at portfolio expansion there. And on that note, just moving to the next page, as part of our continued focus to maximize efficiency in our system, we are looking to consolidate and simplify our foods network as well. Very briefly our foods network has grown over the last several years and also before TCPL, fairly organically, it’s a large complex network of 30 or 40 largely 3P and some of own facilities. We are looking to essentially balance — relook at this to balancing costs, service levels to maximize the efficiency for our foods network. This is something that we are in the process of planning and over the next several quarters, you’ll see us effect this across our network. With that, I’ll hand it back to Sunil.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Yes. Thanks, Ajit. As we mentioned, we see volatile demand environment. We have cycled a high-growth Q3 and we will cycle still higher growth Q4. And we see inflationary pressure. So we are dynamically managing the P&L. You have to remember, inflationary pressures are in the form of freight, packaging, energy, other input costs, plus apart from investing in Sampann, we are also investing behind Tata Soulfull and Tata Q. But the critical piece is, if I point you to the right side of the slide is, between pricing, cost savings, discretionary spend control, improved mix, we have continuously moved up our total EBIT percentage in Tata Consumer Products. We are a portfolio company now and we will juggle different categories, different line items of the P&L to make sure we deliver good bottom line results overall. Sustainability, the other key pillar, we’ve upped the ante on sustainability in Starbucks. Project Jalodari, which is our water conservation has won awards from CII. Tata Coffee has won awards on sustainability from FICCI, as well as Srishti Trusts, which is our CSR project in Munnar, has won awards on sustainable fashion business. Now, in terms of the macro environment, overall, GDP growth are now normalizing.

Tea prices in India are range bound given the initial droughts that we saw in May, which caused a bit of a spike in Q1. And then a little bit of lack of rainfall in November made sure that tea prices are now range bound in India. But Kenyan tea prices are inching up given the — some of the ad spots by the Kenyan government and the Kenyan tea developmental authority. In line with that, we are looking at making sure our pricing is in line to maintain margins in our international market. Coffee is the other commodity, which is moving north very, very rapidly given frost and supply logistics constraints in Brazil, and off-late some issues in Colombian coffee as well. In line with that, we have already taken one price increase in the U.S. and we are in the middle of taking the second one. Just for the perspective in terms of category value growth, the light blue boxes at the bottom show you the category growth of last year same quarter, if you look at it, there were strong growths in Canada and the U.S. and we are cycling that. So it’s no surprise that categories are starting to normalize.

U.S. has continued to see category softness, especially in black tea and that’s where we are strongest, but we are also seeing internally our fruit and herbal, and specialty growing faster, so therefore, we are starting to change our mix here. India specifically, while this quarter has shown a 10% top line as in price growth, but volumes are actually negative 1.6%. That said, I should highlight that it is improving month-on-month. If I look at the numbers roughly from September to December, minus 6%, minus 4%, minus 2% and December was plus 2%. So the category seems to be coming back. Business performance overall, India Packaged Beverages revenue growth was negative 1%. Remember, we are cycling a very, very strong growth of last year, 40 plus. And therefore, overall two -year revenue CAGR is still 19% and volume CAGR is still 8%, which I think is a strong performance by any stretch. And on a moving annual total basis, we have gained 160 basis points.

We are, if you — on the left-hand side, we are focusing on growing the premium end of our portfolio, A&P behind Tata Gold, and we are now implementing a new master brand architecture for Agni to consolidate all our various offerings under various smaller products targeted towards the mass market into one big brand Agni, which we will power with ATL. India Foods, 16% revenue, 4% volume growth. Critical thing to remember is the two -year revenue CAGR is 17%. Salt portfolio continued to grow double-digit during the quarter. Premium salt grew by 29%, so that piece is working. Tata Sampann grew very strongly double-digit. EBIT margin, you have to remember that India Foods business has got multiple legs now. There is salt, but there is also investment behind Sampann, behind Soulfull, behind RTE, and various pieces that we play, and therefore, the EBIT margin for the quarter was impacted. Left-hand side just shows you our launch of Shuddh, which I talked about, which is to cover price points which we’ve vacated in specific markets for Tata Salt. And our online-only pilot on dry fruits. NourishCo goes from strength-to-strength as percentage of previous year close to a 200% growth, INR72 crores of revenue, 91% revenue growth. Very, very strong growth across the portfolio. Close to 50% in Gluco Plus.

Tata Copper Water grew 2.8 times. Himalayan grew by 74. Himalayan turned EBIT positive after breaking even last quarter. So we are going from strength-to-strength there. Revenue growth, two -year CAGR is also at 53%. So this just shows you the strength of the business. As COVID normalizes, we expect to go from strength-to-strength out here. Tata Coffee, I won’t spend too much time because I think we’ve already seen the results, 33% revenue growth, strong growth in plantations, 22%, and extractions grew by 36%. Tata Starbucks, again had a stellar quarter. I would say this is the first quarter since COVID hit where things have been almost back to normal. We’ve got 246 stores now. 94% of the stores were open. We are in 19 cities. We opened 13 stores for the quarter. We’ve continued our trend of opening between 45 to 50 stores, so we expect to hit that target as well this year. Like-for-like stores December 2019 to December 2020, 2021, so pre-COVID December versus last quarter December, same-store sales were up by about 2% to 2.5%. So, again, very strong momentum in the business. Most importantly, Tata Starbucks has been EBITDA positive for the past couple of quarters, but this quarter was also close to PAT breakeven.

It just shows you that, as we expand the business, the bottom line will also continue to improve. In international, the U.K., in line with category revenue, was negative 4%. Teapigs was coming off a very high base, therefore, negative 3%, and we’ve continued to maintain close to a 20% share in everyday black. U.S., revenue growth of 6%, tea — revenue growth of 6% in coffee. Flat revenue growth in tea. We’ve continued to maintain our close to 4.5% share in coffee bags. Canada, our strongest market, negative 2% revenue growth, but just as a perspective, volume was up 2%. This was a question of mix with specialty, which had grown very strong in the quarter the year passed starting to normalize, and therefore, the mix between blackened tea made revenue — reported revenue come down to negative 10%. Market share continues to be high.

We are the market leaders in Canada with a 28.2% market share. Multiple awards and recognitions. We won Leadership Awards for our corporate website. We were recognized as a Great Place to Work. We were the Most Purposeful Brand in the Kantar reports of 2021. Operational Excellence Awards with CII FACE Kaizen Digital Competition awards. We won Gold Award in the Bhopal Chapter convention of QCFI, which is recognized representing the Quality Circle Movement in India and ICD Toopran, which is a factory of Tata Coffee was awarded HR Achievers Gold Award for the third consecutive year. I now hand over to LK to run you through the financial performance.

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

Yes. Thanks, Sunil, and morning, everyone. I’ll first take you through the highlights from the standalone, which is basically the India tea business and the India Foods business, we saw revenue going up from INR1,963 crores to INR2,030 crores, an increase of 3%. In terms of EBITDA, we grew by 42% given among other things by the improvement in tea margins. In terms of consolidated performance, revenue was up 6% on a like-for-like basis, driven by strong performance in India, but also by the non-branded business in Tata Coffee in Vietnam. In terms of EBITDA growth, we’ve seen an increase of INR103 crores or 28% improvement. Moving onto the standalone financials, revenue up by 3% and the drivers we have talked to earlier, which is basically the volume growth in the India tea business, good volume and value growth in the Foods business and you’ve seen Sampann having strong growth in the quarter. EBITDA higher by 42%.

There are many drivers in this EBITDA and I am going to clarify that because you will also see in the segmental report that other expenses have gone up. So I think we just need to understand the way we are operating and what impact the EBITDA numbers reflect, right? So overall, there is an improvement in margins that we are aware. In Foods, and we’ll talk about it when it comes to segments, there is a drop in margins, but you should remember when you look at margins, there are four things to keep in mind when you look at the standalone performance or the performance of India business as a whole. Now, the business consists of the tea business, which you are very familiar with. It consists of the salt business, which is significant. It consists of growth business, which is Sampann, which is the third element. And just these three are important from a standalone perspective. As you get into consolidated performance, we have Tata Q, Sampann and Tata Q, Soulfull are the investments, so right we are managing a portfolio. And the performance of individual components will influence the overall EBITDA.

And as Sunil pointed out, we are managing the EBITDA overall for the combined business. So it’s possible that in one quarter, which we used to invest in one part of the business had increased investment in one compared to the other apart from inflationary pressures. So we need to remember that that we are managing the India business as a portfolio, and the endeavor is to grow both top line and margin progressively. So quarter-on-quarter variation in individual components may sometimes, not be the focus for us, but may be manage the business. So EBITDA at 13.8% compared to 10%. Similar improvement in EBIT, and improvement flowing through to PAT. On a YTD basis, we are seeing that margins are lower than the previous year. That’s more a function of the first two quarters, and we have seen progressive improvement in quarter three and hopefully going forward. Moving onto consolidated performance. Again EBITDA higher by — EBITDA margin 14.6%, higher than the 11.9%. Now, when you come to consolidated, like I said, apart from investment in Tata Q and Soulfull, there is also the international business.

And in this quarter, we had the benefit of great performance in margin terms, especially by the Coffee business, because we had some renegotiation in the input cost with Keurig, we’ve also had overall some benefits of price hike that we have taken. So those are contributors to the improvement in EBITDA in the consolidated performance. When we come to exceptional items, the exceptional items are higher because of ongoing activity on restructuring and you will see more of that in this year and going into next year. The tax rate is slightly higher. Last year was not a normal tax rate because we had the benefit of deferred tax and credits and one-time credits that we took. So this year, it’s more a normalized tax. Overall, net profit higher at INR288 crores versus INR237 crores. When you come to Group net profit after JVs and associates, it is impacted by the performance of JVs and associates. And Sunil talked about the strong performance of Starbucks. But it has somewhat been negated by lower than previous year performance of the plantation business, because as you are aware tea prices have come down, and that had an adverse impact on the plantation business. Moving onto the year-to-date performance.

In terms of EBITDA, we are trending to catch up with last years’ nine-month EBITDA percentage, 14% on a nine -month basis compared to 14.6%. Exceptional items, actually, there is a charge this year compared to a credit in the previous year, which rose because of restructuring NourishCo and one-time credits that we had. Overall, net profit, including JVs and associates, slightly lower, but we are trending on a much better trajectory, and in this quarter, we have reversed the trend we’ve seen in the last few quarters. Moving onto segment performance. First, I’ll take the chart on the right-hand side. Overall, India Beverages 44% of revenue, India Foods 25% of revenue. So together, we are — India is almost 70% of the total business and 30% is International in revenue terms. When you come to profitability, India Beverages and Foods, and actually, we would like to look at it in an integrated manner, more of it going forward, because this quarter is not representative of a normative because we are investing more inputs in this quarter.

There is some inflation, some of it will get corrected over the next few quarters. So 65% of the EBIT is coming from the India business compared to 70% of revenue and 35% from the International business. Though the growth rates are lower, the profitability is definitely improving in the International business and compared to a few years back, we have achieved a significant turnaround in profitability of the International business. Commenting on the segment results, India Beverages growth of 1% is not reflective of the underlying volume growth, which is 5% because tea prices have come down, we have also passed on some of the benefits to the customers. And what we need to look at is the longer-term trend, which Sunil referred to. We are seeing high-single-digit volume growth in this category on a medium-term basis. India Foods high by 16% volume, Sampann growth, as well as some price increases in salt, which we’ve taken towards the end of the quarter to recover some of the input cost inflation.

We have taken about a 15% increase in the price, which hit the market towards December. International business, it’s net — it’s more or less a flat turnover if you adjust for divestitures that we have done and non-branded business had an healthy growth in this quarter. Just a closing comment on the India Foods business, you are seeing a 54% drop, and I alluded to the reasons earlier, but it will be good to recap that in this quarter, we have invested behind Sampann and growth rates are improving for the brand. We also have Tata Q and Tata Soulfull, where again we are in the early stages of investment and this quarter has had higher investment. The third point is, there is an increase in the salt costs because of two reasons: one is, power and because it’s to do with coal imports and coal price and to some extent currency.

There is also an increase in the input cost of salt and brine because of the way the monsoon continued and you must have been reading in the press about shortage of salt, right? So that affects our input costs to some extent. Some of that is already starting to reverse, so hopefully we’ll be out of that in the next few quarters. And more important point, which we want to emphasize is, we are managing India business as a portfolio. So it’s been a quarter we see — we want to invest more in Foods at the cost of Beverages we would go ahead and do it because we are not managing it on a quarter-to-quarter basis. So while there is some merit in looking at quarter, but I would not say that this quarter is a trend to be projected for the future and we are confident in overall growth and including growth of Foods as a separate segment going forward. So that’s it from my side. We are happy to answer any questions.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Yes. So just in terms of the outlook, broadly, in January, we have seen the third wave of COVID underway. The good part is, it is less severe, but there is some impact on business, especially because of the widespread nature of the impact. There are not so many fatalities, but the number of people getting impacted is significant, especially at the front line both production as well as sales. We are hoping for a fast economic recovery this time. But, of course, I mean, you’ve seen this headline everywhere, inflation remains a concern. Demand environment is volatile in our key international markets till the current wave subsides. On the business front, we have delivered competitive growth in our core business, gaining market share in the core categories of tea and salt. India Packaged Beverages had seen normalized margins and now this should continue. We will be lapping extraordinary base quarter next quarter because we had a phenomenal growth in India Beverages Q4 of last year. India Foods business has continued to see share gains and volume growth in Salt and Sampann and this momentum should continue.

However, like LK mentioned, inflation and investments in new business is going to have margin impacts on the short-term. We will be dynamic in managing the P&L. The one thing I would want to highlight is, like I said, we had almost normal quarter or the most normal quarter after COVID has hit, which benefited our out-of-home businesses and Starbucks and NourishCo. The third wave, though, it is short-lived, has presented some short-term headwinds, but we look to be coming back very strongly. U.S. business, Coffee, we are taking price increases to mitigate commodity inflation, and we are continuing to work with our Tata SmartFoodz team to drive efficiencies, synergies and expand portfolio, including into Sampann products very quickly. We have work ongoing on structural simplification in the international business, but more of that when we finish the projects.

With that, I hand it to over back to Nidhi.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Thanks, Sunil. Moderator, can we go to the Q&A queue now, please?

Questions and Answers:

Operator

Sure, thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Abneesh from Edelweiss. Please go ahead.

Abneesh — Edelweiss — Analyst

Yes, thanks and congrats on a very good margin expansion. My first question is on tea business. So, tea industry has appointed E&Y to do a floor pricing below which tea cannot be sold in the Indian market. Do you think this is a big development and this can impact the margins of branded tea companies in the longer-term? And second question is on the relaunch of Agni, how does this impact? You discussed on the overall mother brand, which will cover the smaller businesses. But what is the plan here from a longer-term perspective?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, Abneesh, regarding the tea industry, my answer is, basically the tea plantations are under stress and have been under stress for a long time. And there are multiple things that the industry is trying to move beyond that. Now, there are reasons controllable and uncontrollable because of this is happening. One of the things we’re trying is, try — I mean, proposing a minimum floor price, but remember there are multiple moving parts. The government has just sent out a draft of change in the entire plantation Labor Act that could change dramatically. There is talk of investments on promoting tea consumption, etc. So I wouldn’t comment on anything till it materializes. I mean, the industry is free to appoint anyone and lobby for various items. I would cross the bridge once we know what is coming around the corner. So that’s number one.

Number two, I think we have mentioned very, very specifically that we are going to focus on three big things to grow our branded business: number one is build stronger brands; number two, is expand distribution; and number three is drive innovation. In line with that, we’ve had, I would say, multiple sub-brands, if you may, across the players with Tata Tea. We are now starting to create a master brand architecture where Tata Tea is the mother brand, and you will have brands playing under it, like — just like we’ve got Tata Tea Gold, Tata Tea Premium and now Tata Tea Agni under which all the similar products playing in that price band and that positioning range will be migrated, which then provides help for us as a brand and ability to invest behind brand building and not only relying on it as a push brand.

Abneesh — Edelweiss — Analyst

Sure. My second question is on the Salt business. So, how are you addressing the cannibalization from Shuddh — launch of Shuddh? And second in PPT, you mentioned volume growth coming back post the price hike. So, how are the two related as in price hike leading to volume growth, is it a general comment or is it causal effect?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So let me react to your second question first. We announced — we’ve actually moved our MRPs from INR21 to INR24 over a period of about four months from August to about November. So as that has happened and it happened in two tranches. Normally — I mean, historically, we have seen when we announced a price increase, there is down stocking of the channel, and therefore, volumes go down. Once the price stabilizes in the market, the volumes come back, so that was my comment saying in December, we’ve seen volume come back. In fact, December has clocked the highest volume in FY ’22, so the price has now settled. So that was the comment. Just a perspective that the price — second price increase of INR two happened early December. So the price was still not for the full quarter and volumes came back. So that was number one.

Number two, as regards Shuddh, the critical piece is as long as we have margins, which are comparable for across the portfolio, then it doesn’t cannibalize in terms of the overall margin profile. Shuddh is comparable — broadly comparable to the Tata Salt piece, but it provides us additional layer. So now we’ve got a range of salt offerings right from the premium range of rock salt going down to various other sales, Superlite, Lite, Tata Salt and now we’ve got Tata Shuddh below that. What it effectively does is maintain my market strength across various price bands, making sure that, as I expand distribution, as I spend behind the brand, I am the one who is also gaining market share.

Abneesh — Edelweiss — Analyst

Sure and last quick question on dry fruit, so we have got California at the premium end, which has got quality and premium pricing, and then every e-commerce has got its own private label, which is on the value offering. So what is the space left here? Dabur also, for example, has entered chia seed and pumpkin seeds and most likely they will also enter all these cashew, almond, raisin also. So wanted to understand the margin profile versus your current business, and what is the right to win here?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, Abneesh, the critical thing that we’re seeing in the dry fruits space is the leverage of the Tata brand. In the dry fruit space, our research tells us that the consumers are not very sure of the price value equation on what they’re buying. There are various brands playing in the portfolio, but we do believe that coming in with the Tata brand into a category, which could do with a little bit of trust, injects a huge amount of equity into that play and that is our presumption going forward. Just to test out that presumption, we have done this pilot launch on e-commerce and we have seen a strong response. So now we are fine-tuning, making sure that, again the price value equation and the supply chain, because again this is making sure that we’re sourcing at the right prices, right locations, etc, we are putting that into play before we expand it. Overall, we do expect that the margins in this business will be comparable to our existing business, so it will not be a negative.

Abneesh — Edelweiss — Analyst

Okay. Thanks. That’s all from my side. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.

Sumant Kumar — Motilal Oswal — Analyst

Yes, hi sir. So my question is regarding A&P expense, we have seen a Q-o-Q improvement by 13% and INR150 crores run rate. So can you guide us what kind of momentum will be there for A&P expense for the coming year and coming quarter?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So let me just leave you with one of the things when we started the integration of the salt and tea businesses and put Tata Consumer Products together, was that we were under-indexed on our A&P spending. We had the strength of the Tata brand to play with, but then building individual brands under them, powering the brand, putting them right on top of consumer mind for recall was the critical piece. So over the last, I would say, seven quarters that we’ve been existence, you would have seen at least a trend line of ramping up A&P. All I would say is, in different categories there is a different level of competitive range to play with. Share of market to share of voice is the critical indicator that we look at. And we will make sure that we are in the competitive range to continue to build brands, and syncing it with our distribution expansion.

Sumant Kumar — Motilal Oswal — Analyst

And can you talk about the overall salt revenue growth, volume and value term? Because when we see the momentum of the Food business, we have seen a 20% kind of growth, but this quarter, we have seen a 16% kind of growth. So, where — how is the growth of salt in the absolute term?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Salt is the strongest volume contributor in the Foods business. Salt, I think grew about 3% in volume terms. But like I said, as soon as we announce the price increase in line with what we’ve seen historically, we saw down-stocking in the channel in October and November, and December onwards volume started coming back. We do expect to come back to strong growth as we go forward and the price normalizes. You have to remember, we are already — when we started this integrated business, we were at 28%, 29% market share in salt, we are touching about a 38% market share in salt now and we aim to grow from here. So, you could expect momentum coming back into the salt business.

Sumant Kumar — Motilal Oswal — Analyst

Okay. And what is the revenue growth in salt, absolute?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Revenue growth is — I’ll ask Nidhi to get back to you on the exact numbers.

Sumant Kumar — Motilal Oswal — Analyst

Thank you so much.

Operator

The next question…

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Sorry, salt revenue, just to clarify is 15%.

Sumant Kumar — Motilal Oswal — Analyst

Thank you, sir.

Operator

Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead.

Percy Panthaki — IIFL — Analyst

Sir, just wanted to understand a little more detail on the margin compression in Foods, if you can break it up in some respect in terms of how much is due to input cost inflation, how much is due to higher ad spend or any other line item? And also, whether it is largely — I mean, the margin compression, is it, in basis points larger in salt or is it larger in the Sampann — I mean, in the pulses, spices portfolio?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, I’d just like to clarify, I mean, I’ll repeat what LK said, right? The Food business has got multiple pieces out there. I will start with the tail-end, which is the new businesses that we acquired Soulfull and Tata Q, which are businesses in which we’re investing. Now, when you consolidate it, it all totals out into the Foods business. So that’s number 1. And these are businesses which are prime for growth, expanding our portfolio, getting us into higher gross margin categories, categories of the future. So that’s number 1.

Number two, Sampann is a brand, which we are clearly focused on for growth. And as you’ve seen in the presentation, we’ve delivered a 39% volume growth on Sampann for the quarter. We are building Sampann into a larger brand. And as you’ve seen it, we want it to be a total pantry brand, dry fruits is the latest example of the launches. You will see continued launches across different categories using Sampann, so that is another investment piece.

On the salt itself, there are two pieces — two or three pieces, which are impacting. There is — one is energy cost to produce vacuum evaporated salt. Second piece is the packaging, freight and all the downstream effects of petroleum inflation. And the third piece is there was extended monsoons in the state of Gujarat, and therefore, there was an issue in sourcing brine. So the good and bad part is, the brine costs have gone up, not only for us, they’ve gone up across for everyone. So, in effect, just to give an example, brine, which used to cost at the lower end of the table INR1,750 is now trading at INR2,500, INR2,600. So there has been a jump.

But that would normalize as the new season kicks in starting February, March onwards, and therefore, that will come down. On the packaging, freight, energy, etc, your guess is as good as mine in terms of petroleum and related inflation. And that is why the food margin is down. Plus, the one other thing that I would like to highlight is there is a timing differential between cost and price increases in salt. Cost increases started going up slightly earlier. We took up price increases one round, then we saw the jump and we took out the second round of price increases in December.

So, therefore, for this quarter, the margin compression would be probably slight bit more than what would be on a normal basis. But going forward, brine will equalize. We’ve taken up prices, but the investments in our new businesses would continue and that’s why you would see a bit of compression on margin.

Percy Panthaki — IIFL — Analyst

Okay. Secondly, the deflationary impact that you see on the tea input cost, do you think there will be any incremental benefit of that coming into Q4? Or whatever we have seen in Q3, that captures the entire sort of deflationary impact of input costs?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

See, Percy, the critical thing in tea is, I’m focused on 2, three clear pieces. I’m focused on market share. Our market share is inching up, and the second thing is margins, while I’m building for the future in terms of A&P, as well as distribution. Now, as long as all those pieces are at tick, we will move up and down in line with competition and stuff, which happens in the market. So I can’t predict for the future. Right now, I would say, the margins are healthy, our spends are healthy, my distribution is growing and my market share is in the right trajectory.

Percy Panthaki — IIFL — Analyst

Okay. So basically you’re saying margins at this level are normalized in terms of there is no further benefit likely because tea price has fallen?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

I would say, we will stay competitive in the market. Margins are good today. I would not predict quarter-on-quarter. I would take it as movements happen in the market.

Percy Panthaki — IIFL — Analyst

Okay. That’s all for me. Thanks and all best

Operator

Thank you. The next question is from the line of Jaykumar Doshi from Kotak. Please go ahead.

Jaykumar Doshi — Kotak — Analyst

Hi. Thanks for the opportunity. A quick question on eight O’Clock business. That business had a fairly stable profitability profile over the past several quarters, understand some improvement. As you see inflation in coffee prices, is there any risk to that stable margins that U.S. Coffee business generates, will there be some volatility or…

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, let me put it this way. We’ve seen unprecedented inflation on coffee prices, and in line with that, all competitors in developed markets, most importantly in the U.S., have taken price hikes. We have also taken hikes in line with what we are seeing happening across the industry. We took one round of price hike about August, September this year. And right now we are in the middle of taking the second round of price hikes.

We do expect that margin should stabilize once we take this price hike. But that said, coffee prices are anyone’s guesses. Right now, we expect them to be the $2.20, $2.30 range at which the futures are operating. Our calculation is at that level. But then that said, we had initially indexed it at $1.70, $1.80 and taken the first round. As and when prices move, as I mentioned, we will dynamically manage the P&L to make sure the business is on a stable footing.

Jaykumar Doshi — Kotak — Analyst

Understood. Sounds good. Now, in case of foods business, you indicated at least some easing of brine prices and full impact of price increases taken so far in salt. So where do you expect this Foods business margin range to be and the investments in new businesses Soulfull and Tata Q? So we were looking at 15%, 16% margin not long ago. Will we go back to that 16% margin or given the need for investments in new businesses, that margin band will settle at a lower level?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, Jay, I would just say…

Jaykumar Doshi — Kotak — Analyst

This is from next year perspective, not next quarter, but how should we think about next year assuming some of these inflationary pressures ease?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, Jay, just as a perspective, I would just repeat saying that, we’ve delivered probably the highest EBIT for this year during Q3, 14.6%. We are managing Tata Consumer Products. We are not a tea or a tea and salt company anymore. We are becoming a larger food and beverage company. As we become a larger food and beverage company, we will have puts and takes to make sure that we are delivering the total Tata Consumer EBIT percentages, right? In the shorter-term, you might have some movements up and down as we invest behind new categories, new businesses, acquisitions, spending on capabilities, etc, etc. But overall, I would be very, very confident of Tata Consumer Products margins going forward.

Jaykumar Doshi — Kotak — Analyst

Understood. And the final quick one is, what is your investment — return on investment expectation from the INR400 crore acquisition of Tata Q? And what should be the top line and EBITDA that you expect from that entity or that business in the next three to five years?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, let me say, as a Board and as a Management team, we are extremely focused on the IRR that we are or we will be generating from any of our investments and/or acquisitions. The Tata SmartFoodz whole plan, which we’ve put together does cross those benchmarks and crosses that very comfortably.

Because I would just repeat, there are three or four different pieces around the Tata Q investment, A, we’ll get a brand, which is already a number two in an emerging category in India, but again that category is small in India. The category outside India is roughly 10 to 12 times the size of what it is in India, and that hasn’t even begun, and that is a much more profitable or much more higher margin business to play and we will shortly start laying that as we get our export approvals in place. That’s number one.

Number two, in the ready-to-eat segment itself, given the differentiated technology that MATS has, we can expand our profile to various other products, which will be extremely differentiated and appealing to the Indian consumer. That’s number two.

Number three, the technologies which are present in the plant are across the Foods business, which I can use even for expanding my Sampann portfolio. So we can do from that plant, we are able to do spices, a paste, different simmer sauces, etc.

So there is a whole range of products, which you will see coming out from the Sampann’s table leveraging that facility. Just to summarize, just going back to my top line, the IRR meets the hurdle rates comfortably for any investment that we look at from a Tata Consumer perspective.

Jaykumar Doshi — Kotak — Analyst

That is very helpful. Thank you, Sunil.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Moderator, if I could just interrupt, I realize we are running out of time. So perhaps we will extend the call by another 10 to 15 minutes to address some of the questions. If I may just request the participants to limit their question to one and maybe I can answer rest of your questions later. Thank you.

Operator

Thank you. The next question is from the line of Nitin Shakdher from Green Capital Single Family Office. Please go ahead.

Nitin Shakdher — Green Capital Single Family Office — Analyst

Hi. This is Nitin Shakdher from the Green Capital Single Family Office. Good afternoon to the management. I have one question specifically on the Tata Starbucks business. If you could just highlight some sort of specific revenue figures for the business?

So, namely, I would need the average sales in the quarter for a typical Tata Starbucks outlet as one SKU? And what is the average cost of setting up a typical Tata Starbucks outlet? And what is the average revenue pricing in terms of single consumer per billing? Do you have those figures, please?

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

We don’t have those figures right now. I’ll ask Nidhi to get back.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

We are also conscious that there is some competitive intelligence that you are seeking here, so while we’re able to make overall directions on performance, we would — we’ll see if you can touch base with Nidhi, but it’s something which is very, very specific, we’ll have to respect that there is certain things we may not want to share on the unit economics.

Nitin Shakdher — Green Capital Single Family Office — Analyst

It’s only from of a reason of an investor, nothing from a competitive intelligence. But I think, I’ll get in touch with Nidhi for these specific businesses, because I just want to highlight the growth on the Tata Starbucks business and the revenue attrition was across —

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

We’ll share some information, but just be conscious.

Nitin Shakdher — Green Capital Single Family Office — Analyst

Sure, sure.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Thank you.

Nitin Shakdher — Green Capital Single Family Office — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Alok from Ambit Capital. Please go ahead.

Alok — Ambit Capitalq — Analyst

Hi. Good afternoon. Thanks for the opportunity. My first one is on, in your presentation, where you mentioned getting the right mix of in-house and outsourcing capacity, would it also include the salt plant, because I think that is more to do with Tata Chemicals? So I just wanted that clarification.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So on, salt, very specifically, all our vacuum evaporated salt comes from Tata Chemicals, that is not going to change. But as we’re looking at various different price points, etc, etc, we also do solar salt, which we source from different places. And yes, those facilities will be part of the discussion. But just remember, they will not be part of the overall networking pieces, because most of them are all located in Gandhidham.

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

The other element is that, what we get from Tata Chemicals is bulk salt, right, and we also do packaging, which is also distributed in the — retail packaging is also distributed.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So the PNFA footprint, but repackaging is part of the exercise as to where should the locations be to optimize the freight inward as well as outward and packaging costs.

Alok — Ambit Capitalq — Analyst

Got it, got it. And just a follow up to the salt portfolio, you mentioned about the launch of Shuddh. So, of course, we understand that there is Tata Company Shuddh also, but there is no mention of that in the PPT. So would that also be get into the economy segment as you plan to move up the Agni also?

And secondly on the Shuddh packaging, right, because historically Tata Salt packaging has been the standard white and orange color. Now, as you plan to put Shuddh in a very differentiated packaging, do you — I mean, how do you retain the market acceptance, especially consumers who look at the color of the packaging and then buy? So your thoughts on that? Thank you.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So, first of all, the orange packaging of Tata Salt is part of the brand identity, I would say. Yes, you do not need to tell a consumer beyond showing those pack graphics, they would guess automatically that this is Tata Salt and that’s one of the reasons we’ve got a 38%, 39% share in Tata Salt overall. So that’s number one.

As we expand the portfolio, yes, we have done a pilot launch of Shuddh tea in the North, we are still testing it out, very early days. Shuddh is a completely differentiated packaging. This is the result of consumer research to consumers who are not currently picking up Tata Salt as to what appeals to them and why, so the entire marketing mix that has been developed for Shuddh is the result of research and we have put it into test in a few markets. Depending on the results, we will decide on the rollout plan.

Alok — Ambit Capitalq — Analyst

Got it. Thank you. And wish you good luck for the next quarter.

Operator

Thank you. Over to you, Nidhi.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Yes. So we will take a couple of questions from the webcast. Sunil, there is a question from Ratnabali, saying Sampann volume has grown 39% year-on-year. Can you please elaborate on the particular areas of growth within the portfolio? And can you give us a direction on the products which are EBITDA positive within the Sampann basket?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Sampann, overall should be EBITDA positive in terms of the categories in which are growing. We are primarily in pulses, besan and spices, these are the three big categories. Spices is relatively smaller in the scheme of things. The big growth has come from pulses and besan.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Thank you. And the other question is from Rajasa at Franklin Templeton. She is saying there is a sharp margin pressure in Foods business, which is not clear. Could you please help break it down into salt, pulses, other new businesses, raw material issues versus higher brand investments?

Since salt is an internal transaction, should we assume that raw material cost is more formulaic and less volatile? I think we have addressed part of this question earlier, but over to you, Sunil.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

No, we’ve addressed this question, Nidhi.

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

We can have conversation separately if you need anything more. But I thought we’ve addressed.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Yes, yes. Okay. And then there is one question on the dominance of B2B players like Jio, Udaan, etc, if they could have an impact on our margins, working capital, ROCE going forward?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So let me just put it this way. We would be adapting to the changing environment as we go forward, as we have already done. We will be where the consumer is. The consumer is today buying from D2C, consumer is buying from platforms, online, consumer is buying from modern trade, consumer is buying from kiranas, the kiranas are serve to distributors, kiranas served through B2B players. So we will make sure that we are present on all the platforms.

Now, who goes up, who goes down, your guess is as good as mine, but we will keep adapting it to make sure that while we are playing everywhere, we will keep tweaking our formulas to make sure we are delivering good EBIT margins for Tata Consumer Products.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Okay. Thank you, Sunil. Back to the Q&A queue now, moderator.

Operator

Thank you. The next question is from the line of Ekta Sanghvi from Vallum Capital. Please go ahead.

Ekta Sanghvi — Vallum Capital — Analyst

I just have two questions. Firstly, what is the contribution of rural to our overall revenue? And what is the outlook of the rural demand according to you?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Okay. So the outlook across rural demand is in line with what we are hearing on the FMCG space. There is softness or there is pressure on rural demand. We are seeing that in specific geographies, which have a higher rural percentage and we are seeing it in brands, which are more mass market. That said, I do think it’s just a matter of time before rural bounces back. So we are continuing to expand our distribution across rural. As we said, we had said we will get to one million outlets by September, we have done that. Right now, we are running 1.2 million outlets. But now the purpose is to move just beyond the metros and urban and expand rural, because theoretically, we are weaker in rural than we are in urban on a distribution model. That’s number one. Number two, in terms of rural percentage overall, I would say, it’s in the 35% sort of range, 33%, 35% range and the rest comes from urban.

Ekta Sanghvi — Vallum Capital — Analyst

Okay. Thank you. And on Tata Q, could you highlight the revenue and the EBIT margins of the business?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

See, the Tata Q business started Q3 of 2019, and just at the launch, they entered into the COVID phase, which severely impacted them. So I wouldn’t read too much neither into their top line, neither into the bottom line. Going forward, like I said, our business plan, as presented to the Board, clearly crosses the hurdle rates that we have set for Tata Consumer for internal rates of return, and we do think the portfolio overall can become a sizable number. And it will be accretive to our total algorithm, not only on the top line, but also on the margin front.

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

I think we are also trying to build, like we said, the different aspects of it, that is the existing brand, which today is the smallest portion of the opportunity. The opportunity is also on relooking at the product and the offering in the overall RTE space, looking at exports for which we are in various stages of getting certification in different markets. And third is building better utilization of the plant, not only for the existing RTE products, but to the range of new products that we’re launching in [Indecipherable] right, so that is the way. So what we — it will become a combination of India-led, export-led and the manufacturing hub for a range of products. So that is the way the overall development is going to take. And from a product perspective, given that we are — since we are relooking at the opportunity and some of the priorities for us, we will talk to you more specifically in maybe a couple of quarters from now.

Ekta Sanghvi — Vallum Capital — Analyst

Thank you so much.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Moderator, we will just take one last question now, please.

Operator

Sure. Ladies and gentlemen, we take the last question from the line of Shirish Pardeshi from Centrum Capital. Please go ahead.

Shirish Pardeshi — Centrum Capital — Analyst

Yes. Hi, team. Good afternoon and thanks for the opportunity. Just one quick question on the last participant’s question extending. You may not be able to share or you don’t want to share the Tata Q numbers, but what I’m trying to look at, where we are in terms of current distribution penetration, which all markets we are present? And not maybe value-add, but maybe down the line, Sunil, if you can especially tell us that, what is the number you are looking for down the line three, four years from now?

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

So let me just say, the current size of the RTE market in India is about INR150 crores, but the current size of the export market from India is about INR1,700 crores, INR1,800 crores, right? So that is the differential. Today, we are present only in the domestic market. And today, we are present in the domestic market, primarily in e-commerce and broadly modern trade and very, very small percentage in general trade. Now, again, just like we’ve done with Soulfull, where we moved from 15,000 outlets to on a three-monthly basis 150,000 outlets, the intent is to leverage our distribution to scale and expand the portfolio. In the next one year, if I fast forward, we should be in all the developed markets of U.S., U.K., Canada, Australia, which revenue and margin terms are extremely accretive.

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

And you can take an assumption of that in these numbers with the growth rates.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Yes. And just as a perspective, despite the late launch in modern trade, Tata Q is the number two brand next to MTR.

Shirish Pardeshi — Centrum Capital — Analyst

No, I completely agree with you because I have extensively used this product in Bombay. What I’m trying to say that, when you say that you will be able to share, does that product is looking for supply chain back-end to be developed to expand the market? I’m not going by the market size INR150 crores. I think it’s a huge opportunity. But the only thing is that, how fast you can capture that opportunity? That’s what my intent to ask this question.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

No, so absolutely in the next one year, you will see a dramatically different momentum on the business, like I said, not only on the exports front, but also on the India front, as we expand portfolio and expand distribution.

Shirish Pardeshi — Centrum Capital — Analyst

Thank you.

Lakshmanan Krishna Kumar — Executive Director & Group Chief Financial Officer

See, if we exclude whether.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Yes. Thanks.

Shirish Pardeshi — Centrum Capital — Analyst

Thank you and all the best.

Sunil Alaric D’Souza — Managing Director & Chief Executive Officer

Thank you.

Operator

Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Nidhi for closing comments.

Nidhi Verma — Head of Investor Relations & Corporate Communication

Thanks, Stanford. Thanks, everyone, for joining us today. I recognize we’ve run out of time. So if you do have any further questions, please get in touch with me. And on behalf of the management, thanks again for joining and thanks ICICI for hosting us.

Operator

[Operator Closing Remarks]