Tata Tea Ltd

1
Tata Tea Ltd The Tetley Group Performance
for the Quarter December, 2004
January 25,2005
2
Presenter Panel

• P. T. Siganporia (Managing Director Tata Tea)
• K. Pringle (Executive Vice Chairman - The Tetley
  Group)
• L Krishna Kumar (Senior Vice-President Finance
  I.T. Tata Tea)
• P. Unsworth (Managing Director, Supply Support
  - The Tetley Group)

3
Group Highlights for the Quarter

• Strong operating performance across the Group
• 16 brand volume increase in Indian domestic
  market even as the packet tea market faces
  stagnancy ( as tracked by ORG)
• Market share improvements in international
  markets
• Improved operating margins
• Improved Plantation Operations
• Results in
• Consolidated Income from operations of Rs 806
  crores in line with PY
• Consolidated PAT of Rs 89.29 crores - up 43
• Consolidated EPS of Rs 14.65 up by 37

4
Outline of Presentation

• Tata Tea Ltd Performance Review (PTS LKK)
• The Tetley Group Performance Review (PU)
• Tata Tea Consolidated Financials (LKK)
• Way Forward (KP)
• Questions Answers

5

• Tata Tea Ltd
• Performance Review December,2004
• (PTS LKK)

6
Value Market share
3
2
-7
-6
Source All India, AC Nielsen Retail Audit ,
November 2004
ALL FIGS are Moving Annual Totals
7
Brand Performance Highlights

• Tata Tea ranked the second most trusted beverage
  brand in Brand Equity Survey
• Year to date brand volumes grow by 14 compared
  to the corresponding period of the previous year
• Major portfolio brands restaged

8
Brand Performance Nine Months Comparison

• Tata Tea
• Volume Growth rate of 22
• Tata Tea Gold commands a market share of 1.8
  within 13 months of launch
• Agni
• Brand volume growth of 9 post restaging brand
  end of previous financial year

9
Brand Performance Nine Months Comparison

• Chakra Gold
• Achieves 9 volume growth against steep
  competition in the market
• Kanan Devan
• Kanan Devan Strong launched successfully in
  end-October sale base at 30 of mother brand
• Sale of mother brand increases concurrently

10
Brand Performance Nine Months

• Gemini
• 7 volume growth
• Tetley - The new face of tea
• De growth of brand addressed with relaunch during
  December
• Enters specialty tea market with new flavoured
  tea bags
• Flavoured tea bag strategy to drive consumption
  and growth of Tetley brand

11
Plantation Performance Nine Months

• Gross turnover increases by 18
• Improved profitability from operations
• Higher realisations reflect both quality
  improvement and crop shortfall
• Crop declines by 10 due to adverse weather
  conditions
• Improved capacity utilisation through bought leaf
  operations

12
Tata Tea LtdFinancials
13
Strong Financial Performance Q3

• Top-line growth of 18
• Operating Profit up by 78
• PBT at Rs 35.93 crores up by 65
• PAT at Rs 27.44 crores up by 76
• EPS Rs 4.88 per share up by 76

14
Operating Profit Growth 78

• Brand volumes grow unabated
• Operating expenditure higher due to higher sales
  and increased purchased teas for own brands to
  cater to growth
• Improvement in Plantation Operations due to
  improved realisations, higher productivity
  despite lower crop
• Stringent cost controls all across the Company

Rs/crores
15
Treasury Operations

• Term debt reduced by 9 to Rs 178 crores
• Cost of debt declines from 6.72 pa in the
  previous financial year to 5.4 pa
• Net interest cost at lower levels despite decline
  in interest income
• Currency gains
• Debtors/sales _at_23 days compared to 29 days in the
  previous year

16
Financial Performance December,2004
17
Improved Operating Performance
14
June03 Rs 181 cr
June04 Rs 206 cr
June04 Rs 202 cr
Sept03 Rs 202 cr
16
Sept04 Rs 235 cr
19
Dec03 Rs 202 cr
Dec04 Rs 240 cr

• December03 Rs 202 cr

Income from Operations
18
Improved Operating Performance
June03 Rs 18 cr
56
June04 Rs 28 cr
47
Sept03 Rs 36 cr
Sept04 Rs 53 cr
79
Dec03 Rs 19 cr
December04 Rs 34 cr
Dec04 Rs 34 cr
PBT from Operations
19
The Tetley Group Performance Review
December,2004

• (PU)

20
Shares grow again in competitive markets

• Continued improvement in volume market shares in
  competitive markets.
• Market volume decline in traditional tea markets
• Changed promotional environment affecting net
  sales, particularly in GB.
• Speciality segment continues to grow, Tetley an
  increasingly important player.
• Continued focus on cost control.
• Slightly behind last year on EBIT and PAT
  Performance

21
Financial Performance 9 months

• Group reported sales running 7 behind last year
  (5 after eliminating FX translation losses)
• Nearly 2 improvement to cost of sales, margins
  improve
• EBIT down 6 ,PAT at 12.2m down 9
• Net cash position 11.9m is 7.9m less than last
  year refinancing opportunity

22
Key Financials 9 months
23
EBIT 9 months

• Key issues
• 7 reduction in reported sales partially offset
  by 11 reduction in cost of sales
• Changed promotional mix results in lower cost
• Additional investment in new advertising
  campaingns in GB and France 1 mn y-o-y
• Continued focus on overheads delivers 0.5m
  benefit
• Investment in growth

24
Profit After Tax 9 months

• Key issues
• Increased non-recurring expenditure, benefits
  coming through overheads
• Impact of exceptional benefits last year (nearly
  2m)
• Reduced interest charges due to debt repayment
  (down 5)
• Reduction of 3.9 in tax cost - one off impact

25
Net Cash Flow- 9 Months

• Key issues
• Decrease in overall working capital
• Increase in stock holding to take advantage of
  favourable market conditions
• 14m payment of debt
• Higher levels of capital investment for future
  benefits

Voluntary debt payment
-2.3
26
Market Performance

• GB 9 lower reported sales and 6 lower EBIT than
  2003/04 , new canister range now over 1m in
  sales and growing
• US aggressive competitor activity but improved
  volumes up 7
• Canadian EBIT remains 7 ahead of last year due
  to improved cost of sales, overhead savings and
  some AP phasing benefits
• Australia Steady growth in volumes (up 7) and
  G. Margin (up 15) continue to deliver EBIT at
  record levels
• International Tea volumes up 10 and EBIT is
  14 ahead of last year

27
Market Shares Improvements

• GB - maintained record market share for third
  quarter at 28.6 (up 1.5ppts from one year ago)
• Canada - continued growth in specialty market
  share (21.8), total market growth for segment 9
• Australia - market share to 20.5
• France - maintained record 11.3 market share
• US - increased market share to 11.3 (up
  from 10.8 one year ago)

28
Progress against our strategic goals

• aim to strengthen our business in existing
  geographies
• result record market shares in GB, Canada, US,
  France and Australia
• aim new product and business development in
  range of tea categories
• result New GB Special Teas range exceeding 1m
  in sales
• aim building supply and support capability
• result additional capital investment to deliver
  improved efficiencies
• AND
• energy and finance invested in the future
• - more brand and product developments
  planned this year
• - further geographic expansion

29
Tata Tea Ltd

• Consolidated Accounts

LKK
30
Group Companies
31
Profit before Tax 37

• Profit improvement
• Stringent cost control
• Interest cost savings
• Improved efficiencies
• EPS up by 37 at Rs 14.65 per share

87.50
87.49
119.57
119.57
Rs/crores
32
Financial Performance December,2004
33
Improved EPS
Quarter ended December
Nine Months ended December
37
33
28.06
2003
2003- Rs 28.60
2003- Rs 10.68
28.06
37.97
10.68
14.65
37.97
2004- Rs 37.97
2004- Rs 14.65
34
Tata Tea Ltd Share Price Movement
35

• Way Forward
• (KP)

36
Turnover Mix-Nine Months 2004/05
37
Group Highlights for the Quarter

• Strong operating performance across the Group
• 16 brand volume increase in Indian domestic
  market even as the packet tea market faces
  stagnancy ( as tracked by ORG)
• Market share improvements in international
  markets
• Improved operating margins
• Improved Plantation Operations
• Results in
• Consolidated Income from Opeartions of Rs 806
  crores in line with PY
• Consolidated PAT of Rs 89.29 crores - up 43
• Consolidated EPS of Rs 14.65 up by 37

38
Tata Tetley Strategic Focus

• Strengthen our business in existing geographies
• Expansion into new geographies
• New product development and building business in
• Black Tea
• Fruit and Herbal Infusions
• Ready to Drink Teas
• Out of home
• Building operational capability to enable the
  commercial business to achieve growth
• Management Strength

39
Challenging for leadership in tea across the
world
40

• Questions Answers

41
Thank You