TTL Presentation Feb06

8/6/2019 TTL Presentation Feb06

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Tata Tea Ltd

Merrill Lynch

Investor Conference

Presentation

February, 2006


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Presentation Overview

Tata Tea Overview

Tea Market Overview

Brands Overview & Initiatives

Plantations Overview & Initiatives

Instant Tea Business

Coffee Business

Way Forward


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Tata Tea - Overview


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Tata Tea Overview

Among the top three players in the global tea marketin terms ofmarket 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 inover 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)


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The Tata Tea Group - Structure

Tata Tea Ltd

SBUs Subsidiaries Associates

Brands

Plantations

Instant Tea

Tata Tea GB

(Tetley)

Tata Coffee Ltd

Tata Tea Inc

Rallis India Ltd

Watawalla PlantationsSri Lanka

Exports

Tata Tetley


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Consolidated Turnover 2004/05

Instant Tea

3%

Coffee/InstantCoffee

5%

i

es et

1%

Investment Inome

1%

thers

1%Bulk Tea

4%

Branded Tea

85%

Bulk Tea Branded Tea Instant Tea Coffee/InstantCoffee

i

es et

Investment In

ome

thers

Segm

ent wise turnover


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Details 200 /04 2004/052005/06

9 Months*

Revenues 950 04

P T ( e ore Exceptionals) 20 62 77

Margin 4 7 22

P T (Post Exceptionals) 20 62 204

PAT 92 29 6

Margin 4 2

Rs in Crores

Per or ance Highlights Tata Tea Standalone

* The Tea Industry is seasonal in nature and the nine months results donot necessarily reflect the pro-rata performance for the full year.


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Details 200 /04 2004/052005/06

9 Months*

Revenues 099 077 2 29

P T ( e ore Exceptionals) 29 57 0

Margin 0 2 4

P T (Post Exceptionals) 0 4 9

PAT 205 2 5 24

Margin 7 7

Rs in Crores

Per or ance Highlights Tata Tea Consolidated

* The Tea Industry is seasonal in nature and the nine months results donot necessarily reflect the pro-rata performance for the full year.


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Tea Market Overview


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Top Five Tea Producing ountries

Sri Lanka

9%

Kenya

10%

Indonesia

5%

hina

21%

India

30%

Others

25%

Top Five Tea onsuming ountries

India

23%

hina

16%Russia / IS

6%U K

6%

Japan

5%

Others

44%

India is the largest tea producing and consuming country in the

world.

Global Tea - A Snapshot

World Tea production in 2004 3200 mn kgs (approx)


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Global Opportunity or Tea

Growing Black tea markets define opportunity for geographicalexpansion of portfolio in overall Black tea although stagnancyis reported in world markets

- Potential sector revenue of Rs 48,000 Crs.

Top 30 Tea markets account for 90% of the market volume inthe packaged black tea segment

Tata Tea & Tetley present in only 35% of this market with acombined revenue of Rs 3000 Crs.

Green / Fruits & Herbal / Flavours / Specialty tea account for49% 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 REVENUEGROWTH


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Brands


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India - Overview

2nd largest player after Hindustan Lever

Value market share of 21.6% (A C Nielson)

Brand presence across segments and pricepoints represented by Tata Tea, Agni, Chakra,Gemini and Tetley

Super brand ranking for Tata Tea Premium

Distribution network connecting over 2200stockists and 1.5 mn retailers


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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 ofTata Tea

Tata Gold captures 2% ofmarket sharewithin 14 months of launch

Restage of Tata Tea Agni Launch of specialty teas under the Tetley

brand new face of innovation


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Overseas - Overview

G Tetley continues to outperfor m majorcompetitors with brand leadership at 27%; Growth inspecialty teas segments

Canada Specialty tea market leader at 23%; blacktea 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, Ja aica & altics i

mprovedperformance during the period

Russia, Pa istan, angladesh & South A rica - newmarket entry shows promising results


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Overseas - Initiatives

Acquisition of Good Earth in the USA

Brands

Fruit & herbals new launches in variousgeographies across the globe

Test marketing of iced teas in UK

Increased market share in developing

markets. Success in opening up of newmarkets like Bangladesh, Pakistan, SouthAfrica and Russia.


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Redefining Innovation


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Plantations


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Tata Tea Plantations Restructuring

Pre Restructuring

TTL

NIPO SIPO

Est: 24 26

Emp: 31K 18K

TEA

Current Status

TTL

NIPO SIPO KDHP TCL

24 2 17 6

31K 2K

TEA

AlternativeCrops

100%

Objective

TTL

Plantation

Business

51%19%100%

MinorityInterest

Tourism

AlternativeCrop

TEA


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Plantation Restructure - rationale

Company focused on brand growth

Management skills different for plantation andbrands

Global Sourcing opportunities

Complete ownership not essential

Some long term supply arrangements needed

Considerable scope to enhance plantation value withfocus


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Plantation Restructuring Initiatives

In South India

17 estates recently trans erred to a new co pany or ed under

the E O odel :

Majority ownership o e ployees including over 10000

Wor ers

19 ownership with TTL with special rights

6 estates sold to a subsidiary

Intention to exploit touris potential in balance two estates

In North India

Options or si ilar reconstruction being evaluated or NorthIndia

Alternative crops and usage o land to enhance value and returns


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20

30

40

50

60

70

80

90

0 1 2 3 4 5 6

Citronella

Gestation Period (Years)

GrossMargin

(%)

Relative Size o Revenue (perhectare)

Animal

Innovative

Fishery

High demand

High revenue and good returns

Returns can be enhanced bycombining with duckery andpiggery

Dairy

Good demand

High revenue and good returns

Tea and nature tourism

Complementary to tea

Agriculture Traditional and Non Traditional

An econo ic evaluation revealed that there are several

econo ically viable alternate odels

Agriculture - Traditional Vegetables: Chilly. Tomato

Fruits: Banana, Pineapple,Papaya

Spices: Ginger, Turmeric

Agriculture Non Traditional

Medicinal and herbal

Floriculture

Shortlist

Patchouli

Periwin le

Aracenut

ananaPepper

Le on

Orange

Chilly

Pine-

appleGinger

Papaya

Tur eric

To ato

Chilly

Glory Lily

Low gestation, revenue higher than tea

High gestation, revenue higher than tea

Revenue lower than tea


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Wel are activities

Progressive shi t o existing wel areactivities in South India to an independenttrust

Upgradation o Schools and Hospitalswhich o er potential

Dedicated senior anagerial

responsibility- Director projects Upgradation and outsourcing possibilities

or select North India institutions


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Instant Tea & Coffee


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Instant Tea

Instant tea plant in Munnar with 4.5 mnlb capacity supplying instant teasacross the world with specificemphasis on Tata Tea Inc, USA

Products from Tata Tea Incs packingfacility at Florida present in manyfamous labels (Kraft, Snapple)

Global turnover of instant tea at Rs 94-100 crores

Group exploring growth opportunities


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Tata Co ees usinesses

TCL Businesses

Pepper

Co ee

Plantations

Ti ber

Soluble Coffee

Agglo erated

Spray Dried

Freeze Dried(In Progress)

Marketing

Brands

Vending


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TCLCo ee Business - Co ee Plantations

4% share of Indian Production

Leader in Quality: International Recognitions

Best Robusta in the World,2004

Selected for supply of Premium Coffee to leadingcoffee chains Starbuck,Illy Caf

Series of Flavor of India-Fine Cup Awards

Expansion plans of freeze dried coffee

Cost consciousness

Rationalized employee strength

Stringent cost controls


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Details 200 /04 2004/052005/06

9 Months

Co ee Sales (La h Kgs) 132 110 73

Turnover 185 207 130

PBT (Be ore Exceptionals) 23 30 18

PBT (Post Exceptionals) 22 34 18

PAT 17 30 14

Dividend 50 65 -

Rs in Crores

Tata Coffee


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Way Forward


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Brands

Prioritize growth agenda across the globe andeet growth challenge through:

Organic growth

Appropriate strategic partnerships

Acquisitions

Sustain growth in ey ar ets through Value added segments e.g. Fruit & Herbal

Launches

Consumer driven insights

Utilize distribution networ s to leverageproduct/category extensions


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Way ForwardPlantations

Enhance sustainability ofmodel 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 instantand freeze dried coffee

Selective forays into out of home and consumer segments


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Thank You

Documents

TTL Presentation Feb06