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Slide 1: 

Tata Tea Ltd Merrill Lynch Investor Conference Presentation February, 2006

Presentation Overview : 

Presentation Overview Tata Tea Overview Tea Market Overview Brands – Overview & Initiatives Plantations – Overview & Initiatives Instant Tea Business Coffee Business Way Forward

Tata Tea - Overview : 

Tata Tea - Overview

Tata Tea Overview : 

Tata Tea Overview Among the top three players in the global tea market in terms of market share Market capitalization in excess of US $ 1 billion Consolidated Revenues of over US $ 700 million 29% ownership by the Tata group; FII ownership 22 %; Domestic institutional share holders 15% Primarily a branded tea operation with presence in over 40 countries with significant market share - Tata Tea in India - Tetley overseas Plantation ownership in India and Sri Lanka Includes Tata Coffee (Asia’s largest coffee producer)

The Tata Tea Group - Structure : 

The Tata Tea Group - Structure

Consolidated Turnover 2004/05 : 

Consolidated Turnover 2004/05 Segment wise turnover

Slide 7: 

Rs in Crores Performance Highlights – Tata Tea Standalone * The Tea Industry is seasonal in nature and the nine months results do not necessarily reflect the pro-rata performance for the full year.

Slide 8: 

Rs in Crores Performance Highlights – Tata Tea Consolidated * The Tea Industry is seasonal in nature and the nine months results do not necessarily reflect the pro-rata performance for the full year.

Tea Market Overview : 

Tea Market Overview

Global Tea - A Snapshot : 

India is the largest tea producing and consuming country in the world. Global Tea - A Snapshot World Tea production in 2004 – 3200 mn kgs (approx)

Global Opportunity for ‘Tea’ : 

Global Opportunity for ‘Tea’ Growing Black tea markets define opportunity for geographical expansion of portfolio in overall Black tea although stagnancy is reported in world markets - Potential sector revenue of Rs 48,000 Crs. Top 30 ‘Tea’ markets account for 90% of the market volume in the packaged black tea segment Tata Tea & Tetley present in only 35% of this market – with a combined revenue of Rs 3000 Crs. Green / Fruits & Herbal / Flavours / Specialty tea account for 49% value of all global packaged tea revenues ! - Potential sector revenue of Rs 48,000 Crs. RTD operates in a beverage arena that is at Rs 128,000 Crs. SIGNIFICANT POTENTIAL FOR ADDRESS OF REVENUE GROWTH

Brands : 


India - Overview : 

India - Overview 2nd largest player after Hindustan Lever Value market share of 21.6% (A C Nielson) Brand presence across segments and price points represented by Tata Tea, Agni, Chakra, Gemini and Tetley Super brand ranking for Tata Tea Premium Distribution network connecting over 2200 stockists and 1.5 mn retailers

India - Initiatives : 

India - Initiatives Existing brands restaged in India Launch of Kanan Devan Strong leads to a major jump in market share Sania Mirza drives double digit growth of Tata Tea Tata Gold captures 2% of market share within 14 months of launch Restage of Tata Tea Agni Launch of specialty teas under the Tetley brand – “new face of innovation”

Overseas - Overview : 

Overseas - Overview GB–Tetley continues to outperform major competitors with brand leadership at 27%; Growth in specialty teas segments Canada –Specialty tea market leader at 23%; black tea at 44% Australia – Growing market share of tea bags at 21% USA –USA share up year on year. Value share of black tea 10%. France – Growing market share of tea bags at 11% Poland, Portugal, Spain, Jamaica & Baltic’s improved performance during the period Russia, Pakistan, Bangladesh & South Africa - new market entry shows promising results

Overseas - Initiatives : 

Overseas - Initiatives Acquisition of Good Earth in the USA Brands Fruit & herbals new launches in various geographies across the globe Test marketing of iced teas in UK Increased market share in developing markets. Success in opening up of new markets like Bangladesh, Pakistan, South Africa and Russia.

Slide 17: 

Redefining Innovation

Plantations : 


Slide 19: 

Tata Tea Plantations Restructuring Pre Restructuring TTL NIPO SIPO Est: 24 26 Emp: 31K 18K TEA Current Status TTL NIPO SIPO KDHP TCL 24 2 17 6 31K 2K TEA Alternative Crops 100% Objective TTL Plantation Business 51% 19% 100% Minority Interest Tourism Alternative Crop TEA

Plantation Restructure - rationale : 

Plantation Restructure - rationale Company focused on brand growth Management skills different for plantation and brands Global Sourcing opportunities Complete ownership not essential Some long term supply arrangements needed Considerable scope to enhance plantation value with focus

Plantation Restructuring Initiatives : 

Plantation Restructuring Initiatives In South India 17 estates recently transferred to a new company formed under the EBO model : Majority ownership of employees including over 10000 Workers 19% ownership with TTL with special rights 6 estates sold to a subsidiary Intention to exploit tourism potential in balance two estates In North India Options for similar reconstruction being evaluated for North India Alternative crops and usage of land to enhance value and returns

An economic evaluation revealed that there are several economically viable alternate models : 

Citronella Gestation Period (Years) Gross Margin (%) Animal Innovative Fishery High demand High revenue and good returns Returns can be enhanced by combining with duckery and piggery Dairy Good demand High revenue and good returns Tea and nature tourism Complementary to tea Agriculture – Traditional and Non Traditional An economic evaluation revealed that there are several economically viable alternate models Agriculture - Traditional Vegetables: Chilly. Tomato Fruits: Banana, Pineapple, Papaya Spices: Ginger, Turmeric Agriculture – Non Traditional Medicinal and herbal Floriculture Shortlist Patchouli Periwinkle Aracenut Banana Pepper Lemon Orange Chilly Pine- apple Ginger Papaya Turmeric Tomato Chilly Glory Lily

Welfare activities : 

Welfare activities Progressive shift of existing welfare activities in South India to an independent trust Upgradation of Schools and Hospitals which offer potential Dedicated senior managerial responsibility- Director projects Upgradation and outsourcing possibilities for select North India institutions

Instant Tea & Coffee : 

Instant Tea & Coffee

Slide 25: 

Instant Tea Instant tea plant in Munnar with 4.5 mn lb capacity supplying instant teas across the world with specific emphasis on Tata Tea Inc, USA Products from Tata Tea Inc’s packing facility at Florida present in many famous labels (Kraft, Snapple) Global turnover of instant tea at Rs 94- 100 crores Group exploring growth opportunities

Tata Coffee’s Businesses : 

Tata Coffee’s Businesses TCL Businesses Pepper Coffee Plantations Timber Soluble Coffee Agglomerated Spray Dried Freeze Dried (In Progress) Marketing Brands Vending

TCL Coffee Business - Coffee Plantations : 

TCL Coffee Business - Coffee Plantations 4% share of Indian Production Leader in Quality: International Recognitions Best Robusta in the World,2004 Selected for supply of Premium Coffee to leading coffee chains – Starbuck,Illy Café Series of “ Flavor of India-Fine Cup Awards Expansion plans of freeze dried coffee Cost consciousness Rationalized employee strength Stringent cost controls

Slide 28: 

Rs in Crores Tata Coffee

Way Forward : 

Way Forward

Brands : 

Brands Prioritize growth agenda across the globe and meet growth challenge through: Organic growth Appropriate strategic partnerships Acquisitions Sustain growth in key markets through Value added segments e.g. Fruit & Herbal Launches Consumer driven insights Utilize distribution networks to leverage product/category extensions

Way Forward : 

Way Forward Plantations Enhance sustainability of model Discharge of social responsibility Improve returns to Tata Tea’s shareholders Drive Cost Rationalization Supply chain Overheads Instant Tea Explore growth opportunities Coffee Initial focus on B2B model with product expansion in instant and freeze dried coffee Selective forays into out of home and consumer segments

Thank You : 

Thank You

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