Tata Tea Blog

Friday, September 07, 2007

Tata Tea plans Russia venture

Tata Tea is planning to set up a joint venture company in Russia to tap opportunities in the tea and coffee space.

Speaking on the sidelines of the company’s annual general meeting, Tata Tea Vice-Chairman R K Krishna Kumar said, Tata Tea was talking to a few companies and hoped to set up the joint venture by the end of the current financial year.

The move is part of Tata Tea’s plans to expand its global footprint. Krishna Kumar said, the company would like to have a global footprint from Japan to the US. “We are looking at the beverage market in the US since Tetley already has a footprint in Europe and Canada,” he said.

He declined to comment on possible targets. At present, Tata Tea has a global market share of four per cent and ranks second while Unilever tops with 15 per cent share. Krishna Kumar said, the company would narrow down the gap by having innovative products. He mentioned the joint venture in China for manufacturing polyphenol extracts in this context.

Earlier, addressing shareholders, Chairman Ratan Tata said, the company was not restricted to India and had truly become a global company. “We have an exciting future ahead of us,” he said.

He also mentioned the company was migrating from plantations to branded operations. Around 89 per cent of its revenues came from branded business. He, however, clarified that the company had initially guaranteed offtake from the restructured plantation companies at auction prices.

Tata Tea announced North India Plantations restructuring towards the end of 2006-07. In 2005, South India Plantations was restructured to form Kannan Devan Hills Plantations Co, in which Tata Tea currently holds a 18.2 per cent stake.

Tata said, the south Indian plantations were making losses prior to the restructuring. But last year the company recorded a profit of Rs 8-9 crore and was expected to be in the profit zone this year as well.

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