Tata Tea weighs China greenfield project

The company is looking at a global canvas and is considering options for acquisitions.

Tata Tea is exploring possibilities of setting up a greenfield project in China. The plan is to be finalised over the next six months.

Speaking to newspersons on the sidelines of foundation stone laying ceremony of Tata Medical Centre in the city, R K Krishnakumar, vice-chairman, Tata Tea, said the project would be in the tea sector.

However, it would not be in the plantations space, he said.

Sources said the tea-based venture would be in a business in which the company does not have a presence currently. The company is also eyeing acquisitions overseas.

When asked about the details, Krishnakumar said the contours were being worked out and would be placed before the board for approval within six months.

He said the company is looking at a global canvas and is weighing options for acquisitions. Last year, Tata Tea had said it was looking at big-ticket acquisitions in the US and European markets.

One of the acquisitions that the company is considering now had been bought into by some investors. He pointed out that the company had first bid for

The Tetley group in 1995 but was able to snap it up only in 2000.

However, the company has no plans to grow in the plantations space. Krishnakumar said the company would exit the plantations business in a phased manner. The move is aimed at improving the bottomline.

Tata Tea would also exit its plantations joint venture in Sri Lanka, Watawala Plantations. Watawala, which has 18 tea estates, is a joint venture with Sri Lankan company, Estate Management Services (Pvt) Ltd. However, no timeframe has been set for the divestment.

The company had also initiated the process of divesting its estates in North India Plantations Operations (NIPO). NIPO comprises four estates in Dooars and 20 estates in Assam.

The model would be a little different from the one applied for divesting in South India Plantation Operations last year.

Krishnakumar said the model for NIPO would be richer with the addition of more facilities. Tata Tea's participation in NIPO would come down to less than 20 per cent. The process was expected to be completed by the end of the next financial year.

Last year, Tata Tea had divested 17 estates in south India in favour of workers. Subsequently, Tata Coffee had acquired six estates of Tata Tea in the region, inclusive of net current assets.