Tata Tea Quest for Growth 19832001

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Tata Tea Ltd The Tetley Group Ltd Annual
Results 2003/04
June 25,2004
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Presenter Panel

• P. T. Siganporia (Managing Director Designate
  Tata Tea)
• K. Pringle (Executive Vice Chairman - The Tetley
  Group)
• A. P. Goel (Vice-President Finance I.T. Tata
  Tea)
• P. Unsworth (Managing Director, Supply Support
  - The Tetley Group)

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Highlights

• Strong performance across the Group
• Brands perform well across all markets
• Improved operating margins
• Consolidated PAT up 81

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Outline of Presentation

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

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Outline of Presentation

• Tata Tea Annual Review (PTS APG)
• The Tetley Group Annual Review (PU)
• Tata Tea Consolidated Financials (APG)
• Way Forward (KP)
• Questions Answers

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• Tata Tea Ltd
• Annual Review 2003/04
• (PTS APG)

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Black Tea Scenario
Source Carritt Moran
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MAT Market share
Source All India, AC Nielsen Retail Audit ,
April 2004
ALL FIGS are Moving Annual Totals
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Aim To grow Tata Tea brand value share
Lead Brand Market Share
Value share All India, AC Nielsen Retail Audit
Future Strategy Innovation growth of Tata Tea
to enhance value
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Aim Increasing the Rate of Innovation
Sales contribution from new initiatives
Future Strategy New initiatives projects will
fuel growth
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Aim Innovating growth Tata Tea Gold
Most successful category innovation in last
decade
Value Share All India, AC Nielson Retail Audit
Future Strategy Multiply innovation led growth
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Aim Systemic address of consumer insight

• 6 FMCG benchmark tools deployed to mine consumer
  insight
• 2500 hours of consumer interactions based Usage
  and Attitude study
• Benchmark process and operations driven marketing
  mix deployed
• Market segmentation now based on needs, attitudes
  and beliefs rather than just price point and
  product need

Future Strategy Continuous consumer
understanding driven business plans
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Aim Address distribution penetration
Source AC Nielsen Retail Audit
Future Strategy Enhance distribution
opportunities
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Tata Tea LtdFinancials
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Strong Financial Performance

• Top-line growth up by 4
• Operating Profit up by 33
• PBT at Rs 120 crores up by 20
• Operating cash generated at Rs 130 crores - up
  by 35
• EPS Rs 16.28 per share up by 30
• Dividend _at_ 85, payout 59

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Operating Profit Growth 33

• Growth in brand volumes margins after two years
  of pressure
• Stringent cost controls
• Interest declines by 31

Rs/crores
17
Profit before Tax Growth 20

• Derivative income of Rs 8 crores
• Mutual Fund portfolio earns _at_ 11.6
• Dividend income

Rs 120.34
Rs/crores
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Treasury Operations

• Year end debt reduced by 13 to Rs 196 crores
• Cost of debt declines from 7.6 pa to 6.3 pa
• Gross Interest Cost down by 35 to Rs 18 crores
• Interest Income declines by 31 to Rs 8 crores
• Tight working capital 19 decline
• Debtors/sales _at_5

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Annual Results-2003/04
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Outline of Presentation

• Tata Tea Annual Review (PTS APG)
• The Tetley Group Annual Review (PU)
• Tata Tea Consolidated Financials (APG)
• Way Forward (KP)
• Questions Answers

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The Tetley Group Annual Review 2003/04

• Peter Unsworth

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Another Successful Year

• Strong financial performance
• Market share improvements
• Growing international presence
• New products and innovation

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Strong Financial Performance

• Like for like sales growth of 4.9
• Operating profit up 14.2
• PBT at 23.8m up 85.9
• Cash flow from operations up 5.3m to 42.7m
• Investment behind growth, dividend paid and early
  repayment of debt

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Key Financials
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Operating Profit

• Key issues
• Volume increase but some price pressure
• Changed promotional environment
• Raw tea and exchange rate benefits
• Manufacturing and supply chain efficiencies
• Increased investment behind the brand

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Profit Before Tax

• Key issues
• New market investment through JVs
• Category development investment
• UK pensions issues
• Benefit from refinance

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Operating Cash Flow

• Key issues
• Operating profit up
• Lower interest payment
• Dividends paid
• US and Australia asset sales following
  reorganisation
• Investment in new markets and joint ventures
• Lower capital spend
• Tax increases

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Market Performance

• GB 13 ahead of 2002/03 Changed promotional
  environment, retailer consolidation.
• US and Empirical - First full year of operations
  under the new structure
• Canada 11 increase over 2002/03 - Specialty
  growth
• Australia - Sales up, improved product mix and
  reduced cost of sales
• Poland, France and International Teas continue to
  make steady progress
• Supply and Support, real cost of supply continues
  to fall

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Market Share Improvements
GB record market share of 28.4
(brand leadership) Canada record specialty
market share of 21.3 US increased
share to 10.5 Australia record market share of
20.8 (strong no 2 brand)
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Routes to Growth New markets - hard
launches

• Russia Sept 2004
• 8,000 distribution
• outlets

Bangladesh Feb 2003 - 30,000
distribution outlets

• Pakistan - Jan 2004
• 60,000 distribution
• outlets

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Routes to Growth developing new products
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A year of strategic achievement..

• aim to strengthen our business in existing
  geographies
• result record market shares
• aim expansion into new geographies
• result 5 new market entries
• aim new product and business development in
  range of tea categories
• result over 50 new products launched
• aim building supply and support capability
• result further development of worldwide supply
  chain, 4 million cost savings
• AND
• energy and finance invested in the future
• - more brand and product developments
• - further geographic expansion

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Outline of Presentation

• Tata Tea Annual Review (PTS APG)
• The Tetley Group Annual Review (KP PU)
• Tata Tea Consolidated Financials (APG)
• Way Forward (KP)
• Questions Answers

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Tata Tea Ltd

• Consolidated Accounts-2003/04

A.P. Goel
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Group Companies
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Profit before Tax 68

• Branded Tea volume and margin growth worldwide
• Decline in interest costs by 20
• EPS up by 148 at Rs 36.46 per share

Rs/crores
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Tata Tea LtdConsolidated Accounts of the Group
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Tata Tea Ltd Share Price Movement
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Outline of Presentation

• Tata Tea Annual Review (PTS APG)
• The Tetley Group Annual Review (KP PU)
• Tata Tea Consolidated Financials (APG)
• Way Forward (KP)
• Questions Answers

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• Way Forward
• (KP)

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Turnover Mix-2003/04
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Consolidated Performance 2003/04

• Sales up 5 to Rs 3111 crores
• EBIT up 26 to Rs 433 crores
• PAT doubles to Rs 210 crores
• EPS up from Rs 15 to Rs 36

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Supporting Growth management strength
culture

• Unique focus on tea
• passion
• expertise
• Worldwide supply chain
• capability for range of different markets
• cost efficiency
• Flexible but disciplined
• different operating models
• speed to market eg UK fruit herbal launch
• Challenger thinking
• RTD launches eg product production
• Responsible
• committed to managing our social and
  environmental impacts
• Experts at creating value in tea

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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 Tea (RTD)
• Out of Home
• building operational capability to enable the
  commercial business to achieve this growth

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Challenging for leadership in tea across the
world
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• Questions Answers

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Thank You