Tata Tea Ltd

February, 2006
 Presentation Overview

 Tata Tea Overview

 Tea Market Overview

 Brands – Overview & Initiatives

 Plantations – Overview & Initiatives

 Instant Tea Business

 Coffee Business

 Way Forward
Tata Tea - Overview
 Tata Tea Overview

 Among the top three players in the global tea market

in terms of market share
 Market capitalization in excess of US $ 1 billion
 Consolidated Revenues of over US $ 700 million
 29% ownership by the Tata group; FII ownership 22 %;
Domestic institutional share holders 15%
 Primarily a branded tea operation with presence in
over 40 countries with significant market share
- Tata Tea in India
- Tetley overseas
 Plantation ownership in India and Sri Lanka
 Includes Tata Coffee (Asia’s largest coffee producer)
 The Tata Tea Group - Structure

Tata Tea Ltd

SBU’s Subsidiaries Associates

Tata Tea GB
Brands Rallis India Ltd
(Tetley)

Watawalla Plantations
Plantations Tata Coffee Ltd
Sri Lanka

Instant Tea Tata Tea Inc

Exports

Tata Tetley
 Consolidated Turnover 2004/05

Investment Income
1% Segment wise turnover
Spices etc Others
1% 1%
Bulk Tea
Coffee/Instant Coffee 4%
5%

Instant Tea
3%

Branded Tea
85%

Bulk Tea Branded Tea Instant Tea Coffee/Instant Cof fee Spices etc Investment Income Others
 Performance Highlights – Tata Tea Standalone
Rs in Crores

Details 2003/04 2004/05 2005/06

9 Months*
Revenues 838 950 804

PBT (Before Exceptionals) 120 162 177

Margin % 14% 17% 22%

PBT (Post Exceptionals) 120 162 204

PAT 92 129 168

Margin % 11% 14% 21%

* The Tea Industry is seasonal in nature and the nine months results do
not necessarily reflect the pro-rata performance for the full year.
 Performance Highlights – Tata Tea Consolidated
Rs in Crores

Details 2003/04 2004/05 2005/06

9 Months*
Revenues 3099 3077 2329

PBT (Before Exceptionals) 298 357 330

Margin % 10% 12% 14%

PBT (Post Exceptionals) 301 314 339

PAT 205 215 248

Margin % 7% 7% 11%

* The Tea Industry is seasonal in nature and the nine months results do
not necessarily reflect the pro-rata performance for the full year.
Tea Market Overview
 Global Tea - A Snapshot
World Tea production in 2004 – 3200 mn kgs (approx)
Top Five Tea Producing Countries T o p F iv e T e a C o n s u m in g C o u n trie s

Others
India In d ia
25%
30%
23%
O th ers
Indonesia 44%
5%
Kenya C h in a
10% Sri Lanka China
21% 16%
9% J a p an U K R u s s ia / C IS
5% 6% 6%

India is the largest tea producing and consuming country in the

world.
 Global Opportunity for ‘Tea’
• Growing Black tea markets define opportunity for
geographical expansion of portfolio in overall Black tea
although stagnancy is reported in world markets
- Potential sector revenue of Rs 48,000 Crs.
• Top 30 ‘Tea’ markets account for 90% of the market volume in
the packaged black tea segment
• Tata Tea & Tetley present in only 35% of this market – with a
combined revenue of Rs 3000 Crs.
• Green / Fruits & Herbal / Flavours / Specialty tea account for
49% value of all global packaged tea revenues !
- Potential sector revenue of Rs 48,000 Crs.
• RTD operates in a beverage arena that is at Rs 128,000 Crs.

SIGNIFICANT POTENTIAL FOR ADDRESS OF REVENUE GROWTH

Brands
 India - Overview

• 2nd largest player after Hindustan Lever

• Value market share of 21.6% (A C Nielson)
• Brand presence across segments and price
points represented by Tata Tea, Agni, Chakra,
Gemini and Tetley
• Super brand ranking for Tata Tea Premium
• Distribution network connecting over 2200
stockists and 1.5 mn retailers
 India - Initiatives

 Existing brands restaged in India

 Launch of Kanan Devan Strong leads to a
major jump in market share
 Sania Mirza drives double digit growth of
Tata Tea
 Tata Gold captures 2% of market share
within 14 months of launch
 Restage of Tata Tea Agni
 Launch of specialty teas under the Tetley
brand – “new face of innovation”
 Overseas - Overview
 GB–Tetley continues to outperform major
competitors with brand leadership at 27%; Growth in
specialty teas segments
 Canada –Specialty tea market leader at 23%; black
tea at 44%
 Australia – Growing market share of tea bags at 21%
 USA –USA share up year on year. Value share of
black tea 10%.
 France – Growing market share of tea bags at 11%
 Poland, Portugal, Spain, Jamaica & Baltic’s improved
performance during the period
 Russia, Pakistan, Bangladesh & South Africa - new
market entry shows promising results
 Overseas - Initiatives

 Acquisition of Good Earth in the USA

 Brands
– Fruit & herbals new launches in various
geographies across the globe
– Test marketing of iced teas in UK
– Increased market share in developing
markets. Success in opening up of new
markets like Bangladesh, Pakistan, South
Africa and Russia.
Redefining Innovation
Plantations
 Tata Tea Plantations Restructuring

Pre Restructuring Current Status Objective

TTL TTL TTL

100% Minority
Interest
100% 19% 51%
Plantation
NIPO SIPO NIPO SIPO KDHP TCL Business
Est: 24 26 24 2 17 6

TEA
Emp: 31K 18K 31K 2K
Alternative
TEA Crop
TEA
Alternative Tourism
Crops
 Plantation Restructure - rationale

 Company focused on brand growth

 Management skills different for plantation and brands

 Global Sourcing opportunities

 Complete ownership not essential

 Some long term supply arrangements needed

 Considerable scope to enhance plantation value with

focus
 Plantation Restructuring Initiatives
In South India

 17 estates recently transferred to a new company formed under the

EBO model :
 Majority ownership of employees including over 10000 Workers
 19% ownership with TTL with special rights
 6 estates sold to a subsidiary
 Intention to exploit tourism potential in balance two estates

In North India

 Options for similar reconstruction being evaluated for North India

 Alternative crops and usage of land to enhance value and returns
 An economic evaluation revealed that there are several
economically viable alternate models
Agriculture – Traditional and Non Traditional Shortlist
90
Tomato Agriculture - Traditional
Patchouli Glory Lily
 Vegetables: Chilly. Tomato
80
Chilly
 Fruits: Banana, Pineapple,
Turmeric Chilly Pepper Papaya
Banana
 Spices: Ginger, Turmeric
70
Periwinkle Papaya
Pine- Agriculture – Non Traditional
apple  Medicinal and herbal
Ginger
60  Floriculture
Gross
Margin
Citronella Animal
(%) Orange
50  Fishery
− High demand
Aracenut − High revenue and good returns
40 Lemon − Returns can be enhanced by
combining with duckery and
Low gestation, revenue higher than tea piggery
 Dairy
30 High gestation, revenue higher than tea − Good demand
− High revenue and good returns
Revenue lower than tea
20
Innovative
0 1 2 3 4 5 6
 Tea and nature tourism
Gestation Period (Years) − Complementary to tea
Relative Size of Revenue (per hectare)
 Welfare activities

 Progressive shift of existing welfare activities in South

India to an independent trust
 Upgradation of Schools and Hospitals which offer
potential
 Dedicated senior managerial responsibility- Director
projects
 Upgradation and outsourcing possibilities for select North
India institutions
Instant Tea & Coffee
 Instant Tea

 Instant tea plant in Munnar with 4.5 mn lb

capacity supplying instant teas across the
world with specific emphasis on Tata Tea
Inc, USA
 Products from Tata Tea Inc’s packing
facility at Florida present in many famous
labels (Kraft, Snapple)
 Global turnover of instant tea at Rs 94- 100
crores
 Group exploring growth opportunities
 Tata Coffee’s Businesses

TCL Businesses

Plantations Soluble Coffee Marketing

Coffee Spray Dried Brands

Pepper Agglomerated Vending

Timber Freeze Dried

(In Progress)
 TCL Coffee Business - Coffee Plantations

 4% share of Indian Production

 Leader in Quality: International Recognitions

 Best Robusta in the World,2004
 Selected for supply of Premium Coffee to leading coffee chains – Starbuck,Illy Café
 Series of “ Flavor of India-Fine Cup Awards

 Expansion plans of freeze dried coffee

 Cost consciousness
 Rationalized employee strength
 Stringent cost controls
 Tata Coffee
Rs in Crores

Details 2003/04 2004/05 2005/06

9 Months
Coffee Sales (Lakh Kgs) 132 110 73

Turnover 185 207 130

PBT (Before Exceptionals) 23 30 18

PBT (Post Exceptionals) 22 34 18

PAT 17 30 14

Dividend % 50% 65% -

Way Forward
 Brands
 Prioritize growth agenda across the globe and
meet growth challenge through:
 Organic growth
 Appropriate strategic partnerships
 Acquisitions

 Sustain growth in key markets through

 Value added segments e.g. Fruit & Herbal
Launches
 Consumer driven insights

 Utilize distribution networks to leverage

product/category extensions
 Way Forward
Plantations
 Enhance sustainability of model
 Discharge of social responsibility
 Improve returns to Tata Tea’s shareholders

Drive Cost Rationalization

 Supply chain
 Overheads

Instant Tea
 Explore growth opportunities

Coffee
 Initial focus on B2B model with product expansion in instant and
freeze dried coffee
 Selective forays into out of home and consumer segments
Thank You