Tata Tea Blog

Friday, September 07, 2007

Tata Tea on global mission

There’s nothing definite yet. But Tata Tea may consider a host of key strategic initiatives, including change of company name, amalgamation of its beverage businesses globally and even a stock-split at an appropriate time.

This was indicated on Friday by Tata Group chairman Ratan Tata. He was speaking at Tata Tea’s AGM in the city. The announcements are in step with Tata Tea’s long-term ambitions to emerge as a global beverages heavyweight.

Addressing Tata Tea shareholders, Mr Tata said; “We may consider a name change for the company at an appropriate time. Right now, Tata Tea is largely a tea company. We may also have to consider amalgamating of all our beverage businesses at the right time after evaluating tax implications.” He also hinted at a stock-split in response to a specific shareholder query.

Underscoring Tata Tea’s global ambitions, Mr Tata said, “The company is no longer an Indian company. It is an Indian-owned global company. We are gradually converting it into a wellness beverage company. We are looking at different geographies to expand global footprint.”

Significantly, Tata Tea, which is the world’s second largest branded tea company, has drawn up a road map to expand its global footprint.

Among other things, the company is scouting for acquisitions in the US and South America, setting up a joint venture in Russia and strengthening its presence in China through its joint venture company formed recently with Zhejiang Tea Import and Export Co Ltd (ZTIE). The Chinese JV will also enable the company to make an entry into the Far East.

The company will also make a Rs 15-crore capital expenditure in its existing facilities in 2007-08. At present, Tata Tea has several beverage businesses like Tetley, Jemca, Joekels, Goodearth, Eight ‘clock. Talking to newspersons, R K Krishna Kumar, Tata Tea vice-chairman, said, “We plan to set up a joint venture company in Russia with one or more partners which will look at opportunities both in tea, coffee and other tea-based beverages. There has been an economic upturn in Russia and CIS nations and these destinations are suddenly becoming profitable. This venture will enable us to penetrate in countries like Ukraine, Kazakhstan and others. We hope to float the JV this fiscal.”

Incidentally, the company has already initiated a market research in Russia and adjoining areas. The company’s JV with ZTIE will enable it to strengthen its presence in China. “The JV will work on green tea extracts and polyphenols and come up with some wellness products.”

“Our experience with Energy Brands show that the United States is an extremely profitable market. To become a global player, we need to have a strong presence in the US,” Mr Krishna Kumar said.


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