Tata Tea is likely to merge the special purpose vehicle (SPV) created for the UK-based Tetley's acquisition, Tata Tea Great Britain, with itself after the SPV has repaid its obligations.
At the time of acquiring Tetley, Tata Tea GB's debt-equity ratio stood at 3:1, but has since it has fallen to 1.8:1 and is expected to fall further to 1.7:1 by the year-end. The entire debt on Tata Tea GB's books is likely to be cleared in two years. About $8 million will be repaid through internal accruals this year.
On the company's strategy for the domestic market, deputy managing director P T Siganporia said, "Tata Tea plans to come out with a new offering every two months for the domestic segment."
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He was speaking at the launch of a premium orthodox leaf tea brand, Tata Tea Temptation, here today. "We have very strategically priced it at Rs 55 for 250 gms. The brand would basically try to capture share from the CTC leaf segment. It would be available wherever CTC leaf is available. Though the production of orthodox tea costs more and the packaging of this has also cost us more, we don't plan to charge customers for it," Siganporia said.
The company has come out with dispenser which allows consumers to get familiar with the product, prior to taking it home.
Tata Tea recently launched Chakra gold Tea, a premium dust tea, in Tamil Nadu, Andhra Pradesh, Karnataka and Kerala recently.
According to ORG figures, the company has a market share of 17 per cent in volume and 20 per cent in value. HLL is the leader with a 30 per cent market share in terms of volume. "In the last one-and-half years we have experienced that the regional players have taken the market share from us. This is mainly because of lower commodity pricing," Siganporia said.
Commenting on the unrest in the tea segment, Siganporia said, "The industry is going through a very bad phase. Many tea gardens in the south are shutting down. We hope the government waives the Rs 2 excise duty."
Tea board's export strategy
Deputy managing director of Tata Tea P T Siganporia highlighted some of the recommendations made by the marketing sub-committee of tea board on the industry's exports strategy. The board has recommended that there should be a unified thrust to market more orthodox tea, so that the tea industry can recapture lost ground. The board has targeted 20 million kg Assam tea to be exported by the next season.
The board has also set up teams to market and advertise Indian tea to planters, traders and value-added operators. The board has recommended that more emphasis be laid on generating demand. It has asked the finance ministry that there should be shift in focus from generation of tea to increasing the demand for quality tea.
The Tea Board India, under the ministry of commerce, helps to implement the government's regulations and policies. Acting as a facilitator for the development of the tea industry in India, the board promotes research and exports, collects and disseminates statistical data and also encourages labour welfare programs.