Tata Coffee sees profitability in low-end timber

Tata Coffee's timber division is planning to enhance profitability by supplying low-end timber to Tata Motors' new integrated project coming up at Singur in West Bengal.

MH Ashraff, managing director, Tata Coffee, said, "Tata Motors has been buying plywood from us for its bus body-building units in Goa, Jaipur, Ambala and other places. We see a huge potential for growth in the Singur project."

Tata Coffee sold Rs 2.35 crore worth of plywood to Tata Motors last fiscal.

The division, set up to harvest timber from its coffee estates, has a production capacity of 40,000 square metre that are four mm thick. Tata Coffee has 22 estates spread over 18,454 acres (7,471 hectares) in Karnataka, Kerala and Tamil Nadu.

The timber division has been producing high-end products like fire-retardant composite panels, sound-absorbing sandwich panels and sound-absorbing and fire-retardant composite panels. The company is active in the domestic high-end plywood market and block boards under the brand name 'Tata Conswood'.

By adding higher value to low-end timber and enhancing the realisation per tree, the company, for FY 2007-08, has set a target of Rs 8.50 crore with earnings before interest, tax and amortisation (EBITA) of Rs 65 lakh.

The timber division's turnover during FY 2006-07 was Rs 6.50 crore with a EBITA Rs 23.07 lakh.

To strengthen value addition initiatives, the company is in the process of developing products like fire-check doors based on international specifications.

"This product will provide higher value to low-end timber and enhance the realisation per tree," Ashraff added.