Tata Tea on course for buyouts

Global acquisition may precede local buyout by year end

Tata Tea and Tetley are looking at acquisitions in the domestic and global space, in tea and other beverages.

Speaking on the sidelines of Tata Tea's annual general meeting, R K Krishna Kumar, vice chairman, Tata Tea said, the company was looking at acquisition of businesses rather than just brands, and could be of beverages other than tea as well.

He said these buyouts would materialise by the year end or in next year. Acquisitions in the domestic market would be spearheaded through Tata Tea and global through Tetley.

Sources said it was more likely that the global acquisition would precede a domestic one.

If that's the case, it would be Tata Tea's second global acquisition, the first being UK's The Tetley Group in 2000. Krishna Kumar said Tata Tea has the wherewithal for buyouts. "We have adequate reserves and a comfortable debt-equity ratio" he said.

Meantime, addressing shareholders, Ratan N Tata, chairman, Tata Tea, also hinted at the acquisition plan by saying "growth in Tata Tea would be both organic and inorganic".

He pointed out that the policy adopted by the Tata group was to globalise and become globally competitive. Tata said, the group had charted out its vision to be among the top three market leaders in the country and to reach out to the global market.

Group companies, Tata Motors, Tata Tea, Tata Power and other companies would pursue this vision.

Talking to mediapersons, Percy Siganporia, managing director Tata Tea said that the company would pursue opportunities for growth in different markets.

He said, black tea consumption was growing in the south east Asia up to the Iraq belt while in the western countries it was falling. Growth in the western countries was in the fruits and herbal market.

Tata Tea was present in 35 per cent of the tea consuming market and the company would endeavour to increase its presence.

Plan to sell Haldia stake to West Bengal: The Tata Group is going to sell major part of its holding in Haldia Petrochemical Ltd (HPL) to government of West Bengal (GoWB).

The group holds 14 per cent stake in HPL and it is likely to offload 11 per cent stake in favour of GoWB which is a promoter in the Rs 6,000 crore company along with The Chatterjee Group (TCG) and Tata Group.

Ratan Tata, chairman of the group, said it was keen on keeping a toehold in the petrochemical company. "We will have a token presence in HPL as an expression of confidence both in the project as well in the state. I have also agreed to return to the board of the company at the request of the chief minister," he said on the sidelines of Tata Tea annual general meeting in Kolkata.

Asked if the Tata Group is looking for a premium for selling its stake, Tata said, "The intention is not seeking a premium but we are looking at recovering the holding cost of the share."

Tata Group partnered TCG and state government in mid-nineties to develop the state of the art plant.

Since its commercial production started in the middle of 2001, the company recorded loss in excess of Rs 1,000 crore before returning to black in 2003-04 with over Rs 100 crore profit.