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Tata Tea Ltd

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Instant Tea & Coffee. Instant Tea ... Expansion plans of freeze dried coffee. Cost consciousness. Rationalized employee strength ... – PowerPoint PPT presentation

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Title: Tata Tea Ltd


1
Tata Tea Ltd Merrill Lynch Investor
Conference Presentation
February, 2006
2
Presentation Overview
  • Tata Tea Overview
  • Tea Market Overview
  • Brands Overview Initiatives
  • Plantations Overview Initiatives
  • Instant Tea Business
  • Coffee Business
  • Way Forward

3
Tata Tea - Overview
4
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 (Asias largest coffee
    producer)

5
The Tata Tea Group - Structure
6
Consolidated Turnover 2004/05
Segment wise turnover
7
Performance Highlights Tata Tea Standalone
Rs in Crores
The Tea Industry is seasonal in nature and the
nine months results do not necessarily reflect
the pro-rata performance for the full year.
8
Performance Highlights Tata Tea Consolidated
Rs in Crores
The Tea Industry is seasonal in nature and the
nine months results do not necessarily reflect
the pro-rata performance for the full year.
9
Tea Market Overview
10
Global Tea - A Snapshot
World Tea production in 2004 3200 mn kgs
(approx)
India is the largest tea producing and consuming
country in the world.
11
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
12
Brands
13
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

14
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

15
Overseas - Overview
  • GBTetley 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 Baltics
    improved performance during the period
  • Russia, Pakistan, Bangladesh South Africa - new
    market entry shows promising results

16
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.

17
Redefining Innovation
18
Plantations
19
Tata Tea Plantations Restructuring
  • Pre Restructuring
  • TTL
  • NIPO SIPO
  • Est 24 26
  • Emp 31K 18K
  • Current Status
  • TTL
  • NIPO SIPO KDHP TCL
  • 24 2 17 6
  • 31K 2K

Objective TTL Plantation Business
Minority Interest
100
51
19
100
TEA
Alternative Crop
TEA
TEA
Alternative Crops
Tourism
20
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

21
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

22
An economic evaluation revealed that there are
several economically viable alternate models
Shortlist
Agriculture Traditional and Non Traditional
Tomato
Agriculture - Traditional
Patchouli
Glory Lily
  • Vegetables Chilly. Tomato
  • Fruits Banana, Pineapple, Papaya
  • Spices Ginger, Turmeric

Pepper
Banana
Chilly
Turmeric
Chilly
Papaya
Periwinkle
Pine- apple
Agriculture Non Traditional
  • Medicinal and herbal
  • Floriculture

Ginger
Gross Margin ()
Animal
Citronella
Orange
  • Fishery
  • High demand
  • High revenue and good returns
  • Returns can be enhanced by combining with duckery
    and piggery

Aracenut
Lemon
  • Dairy
  • Good demand
  • High revenue and good returns

Innovative
  • Tea and nature tourism
  • Complementary to tea

Gestation Period (Years)
23
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

24
Instant Tea Coffee
25
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 Incs 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

26
Tata Coffees Businesses
TCL Businesses
Plantations
Soluble Coffee
Marketing
Coffee
Spray Dried
Brands
Vending
Pepper
Agglomerated
Freeze Dried (In Progress)
Timber
27
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

28
Tata Coffee
Rs in Crores
29
Way Forward
30
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

31
Way Forward
  • Plantations
  • Enhance sustainability of model
  • Discharge of social responsibility
  • Improve returns to Tata Teas 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

32
Thank You
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