Has a Rs 1,700-crore war chest readily available; looking at coffee and beverages as well.
The acquisition juggernaut continues to roll at Tata Tea, despite the company posting mediocre results for the quarter ended December 31. The aim, according to company officials, is to cross the Rs 5,000-crore turnover mark. It is short by around Rs 800 crore.
Acquisitions, said Chief Financial Officer L Krishna Kumar, will help the company bridge the gap, even as it keeps focus on organic-growth initiatives. He adds that markets such as Russia, Eastern Europe and Asia-Pacific are areas where the company is scouting for buys.
| KEY ACQUISITIONS |
| * Tetley in the UK in 2000 |
| * Good Earth in the US in 2005 |
| * Jemca in the Czech Republic and Joekels Tea Packers in South Africa — both in 2006 |
| * Trademarks Vitax and Flosana in Poland in 2007 |
Over the last decade, it had bought Tetley in the UK in 2000, Good Earth in the US in 2005, Jemca in the Czech Republic and Joekels Tea Packers in South Africa, both in 2006. In August 2006, it acquired a 30 per cent stake in US-based Energy Brands Inc or Glaceau for about Rs 3,200 crore. However, it sold its stake in the company to Coca-Cola a year later for Rs 4,900 crore, booking a profit of about Rs 1,700 crore on the transaction.
This cash, says Kumar, is available to the company for acquisitions in new regions. Tata Tea also acquired trademarks Vitax and Flosana in Poland in 2007, even as subsidiary Tata Coffee acquired Eight O' Clock Coffee in the US a year before.
Kumar says the company's endeavour is to buy companies/brands in these markets to strengthen its presence there. Russia is one of the largest tea consuming markets in the world. Some other tea consuming regions include Poland, Turkey, Ireland, the UK and Japan, besides India. Besides prospects in tea and coffee, the company is also scanning for targets in the healthy beverages arena. "By healthy beverages, I mean products that are non-carbonated and non-alcohol," clarifies Kumar.
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The third quarter results reflected for the first time its Russian beverage business, which it had acquired last year. A total of 51 per cent was acquired in the branding, packing and distribution company called Grand in Russia.
For the nine-month period ended December 31, Tata Tea posted a decent Rs 4,212.5 crore in net sales, up 20 per cent over the corresponding period a year earlier, when net sales was Rs 3,571.7 crore.