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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