Tata Coffee Limited

1
Tata Coffee Limited

• Presentation to Analysts
• February 21, 2007

2
Outline of Presentation

• Evolution of Tata Coffee Growth Initiatives
• Overview of Coffee Market in the USA
• EOC Acquisition
• The Company
• Rationale for acquisition
• Strategic Benefits and Synergies

3
Evolution of Tata Coffee

• Tata Tea acquired a controlling stake in
  Consolidated Coffee Ltd in 1990
• Asian Coffee Ltd acquired in 1992
• Asian Coffee Ltd and 2 smaller plantation
  companies merged into Consolidated Coffee Ltd in
  Sep 1999
• Consolidated Coffee Ltd. renamed Tata Coffee Ltd.
  in April 2000
• Tata Coffee Ltd. acquired High Hill Coffee (P)
  Ltd, a start-up Soluble coffee plant in 2004 and
  merged with Tata Coffee in 2005
• Acquired Anamallais Plantations from Tata Tea in
  2005
• Acquired Eight O Clock Coffee, a specialty
  coffee brand in USA in 2006

4
Tata Coffees Businesses
TCL Businesses
Plantations
Marketing
Soluble Coffee
Coffee
Spray Dried
Brands
Tea
Vending
Agglomerated
Freeze Dried
Pepper
Timber
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Plantations

• Largest Coffee Producer in Asia 10,000 MT
• Major Customers based in Europe
• Largest Pepper producer in India 1,300 MT
• Tea 7,500 MT
• Large Timber Resources
• Total Area 12,773 Ha
• Total Cultivated Area 10,321 Ha
• Employee Strength 9000 (approx)

6
Focus on Quality

• Won 4 awards at Flavor of India The Fine Cup
  Award at Bangalore, 2002, 3 awards at
  Boston,USA, 2003, 4 awards at Trieste, Italy
  2004, 3 awards at Seattle, USA 2005 5 awards at
  Berne in 2006
• Won the Gold Medal for the Best Robusta in the
  world at Paris in 2004
• Kenneth Davids, a coffee expert from US
  commissioned by Coffee Board, to select portfolio
  of 10 best Indian coffees in 2004. Six of these
  were from TCL
• TCL selected for supply of premium coffee to
  global premier coffee chains such as Starbucks,
  Illy Café Nespresso

7
Resilience Initiatives

• Handling The Plantation Crisis

Drop in Coffee Price to a 100 Year Low in 2002-03
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Robustness of Financial Results During Plantation
Crisis
In spite of the worst years for coffee, the
company made profits Instant coffee buoyed the
profitability despite the plantation crisis
This strategy continues to be extended Entered
the up market freeze dried coffee to complete the
full range of coffee offerings Entered
tea plantations Expanded into branded coffee
with the acquisition of Eight OClock
Coffee Freeze dried coffee to be offered under
the Eight OClock brand
212
203
178
191
182
168
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13
20
22
34
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Rs. Crores
Bottom line insulated from over-dependence on any
one stream of income
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Pepper

• Emphasis continues to be on Value Addition
• State of the art machinery procured from Tata Tea
  relocated at Kushalnagar to meet Stringent
  Export Norms
• Offerings extend to White Pepper, Black Pepper

10
Timber

• Large Rosewood reserves
• Silver Oak inter-planted as shade for Coffee,
  with a sustainable cycle of Timber Supply
• Annual felling program of 3000 to 4000 trees
• RD efforts led to high value offerings
• Fire Retardant
• Sound Absorbing
• Finger Jointed

11
Timber Value Addition.

• Identified target customer Tata Motors
• Glo Bus Targeting the niche transport segment.
  Tailor made to customer requirements. Expected
  huge demand
• Star Bus Mid level customers who demand cost
  effective transport
• TCL is the approved tier 1 vendor for wood
  based composites to Tata Motors

12
Initiatives - Soluble and Freeze Dried Coffee

• Soluble Coffee - 100 Export Oriented Unit with
  an export volume of 5,000 MTs to Russia, CIS and
  South East Asia
• 2 production centers at Hyderabad and Madurai
• Freeze dried coffee is the premier offering under
  the soluble coffee range
• Top of the line product commanding a healthy
  premium with growing demand
• Will now explore using Eight OClock Coffee as a
  brand for our markets
• Optimization of raw material cost by RD efforts
  and introduction of other origins
• Enhancement of agglomerated coffee production

13
Marketing Brands Vending

• Tata Mr. Bean present in all Southern states of
  India
• Vending All India spread with over 6000
  machines

14
Initiatives - Africa

• Enter Uganda
• Large coffee producer
• Very competitive input prices
• Government committed to value added exports.
  Various incentives extended for exports
• Coffee the main export earner
• Positive socio-political environment
• Educated English speaking workforce
• Entry level barriers expected to be relaxed by
  the importing countries due to Ugandas Least
  Developed Country status
• Our efforts are to enter European markets through
  Africa with both bulk and brands

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Overview of U.S. Coffee Market
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U.S. Coffee Industry Overview

• Coffee is distributed primarily through two
  channels, retail and foodservice

U.S. Coffee Market
Retail46
Foodservice54
Total 21.3 billion
U.S. Retail Coffee Market

• Within Retail, Grocery is the dominant channel
  with over 70 of retail coffee sales

AlternateChannel28
Grocery72
Total 9.8 billion
U.S. Retail Coffee Market

• Ground coffee is a growing segment and represents
  a majority of sales in the retail channels

Whole Bean 13
Ground87
Total 9.8 billion
Source Datamonitor 2005 Retail Grocery, mass,
Club and drug/dollar stores Foodservice
Restaurant/hotels, convenience stores, gas
stations and offices Grocery Supermarkets,
health/natural food and gourmet Alternate
channel Club stores, mass merchandisers and drug
stores
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Premiumization of U.S. Coffee Industry
2000-2006 Coffee Segment Growth ( millions)
Growth in the grocery channel is being driven by
premium and value gourmet segments
Source IRI as of 12/31/06
Dollar Market Share of Selected Brands
Premium and value gourmet segments are capturing
market share
GourmetPremium/Value
Source IRI as of 12/31/06
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High Penetration into U.S. Household
2006 Consumption By Location

• Large Potential Consumer Base
• 8 out of 10 Americans are coffee drinkers
• 71 of All cups of coffee are consumed at home
  (notwithstanding increase in Specialty chains)

Source NCA
Daily Coffee Consumption Penetration

• Stable Demand from Year-to-Year
• 56 of the adult population drinks coffee daily

Source NCA Based on Cups Consumed
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Eight OClock Coffee The Company
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Eight OClock - Key Milestones
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EOC Channel Overview
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Eight OClock Product Line Overview

• Full product line with variety for all consumers
• Blends, single origins, flavors, roasts,
  decaffeinated, etc.
• Retail and foodservice offering
• Large and small packages
• Whole bean and ground

2006 Gross Sales by Variety
2006 Gross Sales by Bag Size
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Eight OClock Market Position

• Third largest U.S. retail coffee brand by volume,
  behind only Folgers and Maxwell House
• Strong leadership position in niche whole bean
  segment 1 Whole Bean brand with
  high quality perception
• Dominant Value Gourmet player with 60 market
  share high quality coffee at affordable
  prices

Total Retail Coffee Segment
Whole Bean Segment
Value Gourmet Segment
Hills Bros2
All others10.4
All others 20.2
Chock3
All Others 25.7
New England8.5
Starbucks4.2
Folgers34
Melitta8.2
EOC43.5
EOC60.3
EOC4.5
Private Label 10.3
Don Francisco12.6
Maxwell House21.2
Private Label10.9
Starbucks20.5
Source IRI as of December 31, 2006 (includes
total U.S. grocery) Note Market share in pounds
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Eight OClock has a Leading Market Position in a
Differentiated Niche

• Premium Gourmet
• Premium quality
• 100 premium Arabica
• Bagged
• Premium price (7.59 and up)1
• Starbucks 56 of segment
• Superior penny profit of 2.73/unit

• Value Gourmet
• Great quality
• 100 Arabica
• Typically bagged
• Value price (4.096.99)1
• EOC60 of segment
• High penny profit of 1.41/unit

• Mass
• Moderate quality
• Robusta blend
• Canned
• Low price (2.993.59)1
• Folgers and Maxwell House 83 of segment
• Low penny profit of 0.81/unit

1 Reflects average non-promoted retail prices
(per unit) over the last 12 weeks ending 12/31/06
from IRI
25
Eight OClock Distribution Network
EOC Sales by Channel (2006 Actuals)
Products predominantly sold to large
supermarkets, mass merchandisers and club store
chains
Source Company data as of 12/31/2006 Note
Alternate channel includes mass merchandisers,
club stores, drug/dollar stores and military.
Other includes foodservice, export and all other

• Strong customer base encompassing large
  retailers

Selected Customers
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EOC Acquisition - Rationale
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The acquisition would add significant value to
the Tata Group
Significant brand equity
Brand leadership in the value gourmet segment
offers potential for brand extensions in similar
category
Distribution strength
Platform value

• EOC sells in channels that cover 67 of All
  Channel Volume
• Potential to push complementary products through
  EOC channel

Sizable platform for entry into worlds largest
coffee market
Business scale
Geographical diversity for Tata
Tea group
Helps in achieving significant scale for the
coffee businessConsolidated sales of over 200mm

• Strengthens presence in the U.S. market
  significantly
• Tetleys U.S. revenue 33mm
• Good Earth revenue 16mm
• EOC revenue 148mm

Potential to leverage brand equity in other
geographies
Potential to launch EOC in other geographies such
as Russia and Ukraine that have similar consumer
profiles and recognize U.S brands
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The EOC acquisition completes the value chain for
Tata Coffee

• To emerge as one of the leading players in the
  coffee industry
• To move up the value chain by adding value to all
  products and operations
• To provide customers with a range of products of
  high standard and value in every segment

Tata Coffees vision mission
TCLs current business profile

• EOC fulfills Tata Coffees vision for its business

Best beans

• Strong brand with over a 85 year old history
• Sells 100 Arabica Whole bean and ground
• Attractive positioning Premium coffee at an
  affordable price
• Third largest U.S. retail coffee brand by volume
• Premium packaged products
• 20 SKUs selling through grocery, mass retailers
  and food service and club outlets

Best processing facilities
Branded presence
Value added products
Marketed as commodity/ 3rd party labels
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Tata Coffee plans to leverage the EOC brand for
its future products and markets

• Extend brand to instant coffee

• Create brand presence in roasted ground coffee

• EOCs 150 year old coffee history and experience
  in the Roast Ground segment presents an
  opportunity to establish presence in RG markets
  world-wide
• Tata Coffee plans to use EOC as an umbrella brand
  to introduce other coffee variants
• Tata Coffees future plans for growth through
  initiatives like out-of-home coffee are aligned
  with EOCs business growth plans

• TCLs biggest market is Russia
• Western brands perceived to be superior to Asian
  brands in Russia , CIS etc
• Opportunity to extend EOC brand as an umbrella
  brand for instant coffee in Russia, CIS etc
• Potential to extend brand to premium freeze dried
  offering
• Potential to extend brand to Eastern Europe and
  other countries

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Strategic Benefits and Synergies
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Strategic Benefits for Tata Coffee

• Strong brand presence
• Global focus on brands
• Opportunity to achieve greater globalization
• Taking the EOC brand to new geographies to
  markets outside the US

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Operational Synergies

• Pooling of global talent within Tatas beverage
  businesses to develop and execute an integrated
  business plan
• Cross-utilization of distribution channels of EOC
  for tea, coffee and enhanced water sales
• Coordination of a US beverage growth agenda for
  Tetley, Good Earth and Eight OClock Coffee and
  Glaceau
• New Product Development integrated NPD and
  applications across Tata's beverage businesses

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Turnover EBITDA Period Ended 31st December
2006
Turnover jumps by 157
EPS increases by 71
EBITDA jumps by 183
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THANK YOU