 "Tata Global buys 10.59% more in Kanan Devan")
Tata Global Beverages has acquired an additional 10.59 per cent stake in Kanan Devan Hills Plantations Co, a division it hived off in 2005.
According to the company’s annual report for 2012-13, during the year, Tata Global increased its stake to 28.52 per cent, and consequently, Kanan Devan is now an associate company. The increase in stake was on account of facilitating an exit for some shareholders and not for any strategic reasons, it added.
Floating Kanan Devan was part of the company’s broader strategy to reduce exposure in plantations and turn focus to creating global beverage brands. In 2005, it created South Indian Plantations Operations, comprising 17 estates that were hived off to form Kanan Devan, with employees as its shareholders.
Similarly, North Indian Plantations Operations, now Amalgamated Plantations Pvt Ltd (APPL), was created. APPL has around 20 estates in Assam and four in West Bengal.
According to the original plan, International Finance Corp and IL&FS were supposed to hold 20 per cent each in APPL, while Tata Global was to control another 20 per cent, depending on worker participation. But IL&FS backed out due to market conditions and Tata Global still holds 49.66 per cent in APPL. “In 2005, there was a lot of tea in the system and sourcing quality tea was not an issue. Now, demand has outstripped supply and having captive control over quality tea makes sense for packet tea companies,” said an industry representative, who did not want to be named. Tata Global has said it owned a minority stake in plantation companies such as Kanan Devan and APPL for the past several years, and would continue to hold such equity stakes as an integral part of its strategy. “These plantation companies are independently managed,” the company said. The annual report also said the holding company had a put option agreement with IFC in relation to its investment in APPL.
In terms of the agreement, IFC has the right to exercise a put option whereby the holding company is obliged to purchase a maximum of 30 million shares in APPL, if certain conditions or events stipulated in the agreement do not occur.
However, even though Tata Global continues to hold significant stakes in businesses that it wanted to reduce exposure in, the company has made it clear its focus is on the branded natural beverages business in tea, coffee and water.
“We have a strong portfolio of brands across the world, and remain committed to strengthening and growing them. Brands are at the core of our strategy, and this will continue to remain so,” Tata Global said.
According to the company’s annual report for 2012-13, during the year, Tata Global increased its stake to 28.52 per cent, and consequently, Kanan Devan is now an associate company. The increase in stake was on account of facilitating an exit for some shareholders and not for any strategic reasons, it added.
Floating Kanan Devan was part of the company’s broader strategy to reduce exposure in plantations and turn focus to creating global beverage brands. In 2005, it created South Indian Plantations Operations, comprising 17 estates that were hived off to form Kanan Devan, with employees as its shareholders.
Similarly, North Indian Plantations Operations, now Amalgamated Plantations Pvt Ltd (APPL), was created. APPL has around 20 estates in Assam and four in West Bengal.
According to the original plan, International Finance Corp and IL&FS were supposed to hold 20 per cent each in APPL, while Tata Global was to control another 20 per cent, depending on worker participation. But IL&FS backed out due to market conditions and Tata Global still holds 49.66 per cent in APPL. “In 2005, there was a lot of tea in the system and sourcing quality tea was not an issue. Now, demand has outstripped supply and having captive control over quality tea makes sense for packet tea companies,” said an industry representative, who did not want to be named. Tata Global has said it owned a minority stake in plantation companies such as Kanan Devan and APPL for the past several years, and would continue to hold such equity stakes as an integral part of its strategy. “These plantation companies are independently managed,” the company said. The annual report also said the holding company had a put option agreement with IFC in relation to its investment in APPL.
In terms of the agreement, IFC has the right to exercise a put option whereby the holding company is obliged to purchase a maximum of 30 million shares in APPL, if certain conditions or events stipulated in the agreement do not occur.
However, even though Tata Global continues to hold significant stakes in businesses that it wanted to reduce exposure in, the company has made it clear its focus is on the branded natural beverages business in tea, coffee and water.
“We have a strong portfolio of brands across the world, and remain committed to strengthening and growing them. Brands are at the core of our strategy, and this will continue to remain so,” Tata Global said.