Tata Tea Group

1
Tata Tea Group Q2 Results
October 31, 2006
2
Group Highlights Quarter 2

• Robust operating performance across the Group
• Improved turnover including new acquisitions
• Domestic brand sales higher by 7
• Market share improvements in international
  markets
• Higher investments for growth
• Consolidated Results improve
• Income - Rs 1015 crores, up by 27
• PBT before exceptional items - Rs 148 crores, up
  by 7
• PBT post exceptional items - Rs 214 crores, up by
  58
• PAT at Rs 194 crores up by 92
• EPS at Rs 34.52 - up by 92

3
Tata Tea LtdStand Alone Q2 Highlights

• Strong performance
• Improved income from operations reflecting higher
  brand sales, improved auction realizations and
  higher exports
• Domestic brand sales- higher value by 9
• Market share improvement
• Higher dividend from long term investments
• Stand Alone Results improve by
• Income from Operations - Rs 274 crores, up by 7
• PBT before exceptional items - Rs 111.49 crores,
  up 32
• PBT post exceptional items - Rs 179.49 crores, up
  by 117
• PAT at Rs 163.92 crores - up by 160
• EPS at Rs 29.16 - up by 160

4
Tata Tea Ltd 14 quarters of continuous
Operating Profit GrowthQuarter on Quarter
62.71
5
Tata Tea LtdOperational Review
6
Tata Tea Ltd Brand Value Market share
-
(9)
18
-6
Source AC Nielsen
All values are Moving Annual Totals
7
Growing in India

• Tata Tea Premium High Growth despite increase
  in price to trade
• Tata Tea Agni Impressive initial gains post
  price reduction in September
• Tata Tea Gold Double digit growth over PY
  despite price increase - through new thematic
  communication
• Tetley Continued good response to regular and
  flavoured tea bags

8
Growing in India

• Chakra Gold records highest ever H1 sales growth
  y-o-y through consumer packs, consistent
  thematic media merchandizing support and
  initiative in value packs
• Kanan Devan Higher than PY through the new
  variant and HTS activity
• Gemini H1 sales are a record in the last 6 years
  through initiatives in rural markets and
  consumer promotions

9
New Products
10
URBAN MALL
RURAL MALL (Haats)
Visitors
Customers
Brands
Fakes
VAP
VFM
India
Bharat
Comprehensive Shopping Experience
Gaon Chalo
11
Branded Tea - Market Shares (12 months MAT)
(Source A.C.Nielson)
12
Jemca Acquisition

• Market leader in Czech Republic, turnover 14m
• Czech market 70m, growing at 4 p.a.
• Low cost Fruit Herbal manufacturing base
• Capabilities in Black, Green and Rooibos also
• New business model learning

13
Joekels Aquisition

• 5 market share in SA
• 3 year CAGR of 30 on sales
• Challenger mentality of entrepreneurial owners
• Platform for launch of Tetley into Premium sector
• Black tea manufacturing base for Southern Africa
• Capabilities in Black and Rooibos

14
North India Plantations Restructure
15
MAP OF
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North India Plantations Overview
Total area 24091 hectares
Assam area 20262 hectares
Total Manpower 31800
Assam Manpower 26000
Average of 3 years ended 2005/06
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Rationale of Restructuring

• Value enhancement in the two areas of land and
  manpower will only be possible by transfer of
  operations into an alternate business model with
  ownership from all stakeholders including
  employees
• Focused and undivided attention on expanding the
  agro based activities in the large landholding is
  required
• For Tata Tea with the management focus being on
  brand building of beverage business beyond tea it
  may not be possible to achieve this objective in
  the desired manner and time frame.
• The Tata Tea management would take steps to
  ensure that the proposed divestment of the
  plantation operations should have no adverse
  impact on the welfare of employees
• The sale option is therefore not being considered
  as Tata Tea does not want any compromise in the
  welfare of the employees the environment

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Investor Profile

• IFC, Washington
• First overseas investment in Plantation Sector
• Supportive of employee ownership model and
  development of Assam
• Will also provide grants for training and
  development
• ILFS
• Supportive of development initiatives in Assam
  West Bengal
• Interested in development of alternative crops
• Globally Managed Services
• Instrumental in securing approvals for non tea
  initiatives
• Expected to assist in aggregation opportunities
  in Assam
• And others

19
Strategy for value enhancement
LEVERAGE LAND AND AGRI CHAIN ASSET VALUE-
ENHANCE VALUE FROM NON-TEA OPERATIONS -
develop appropriate value adding products -
increase area under alternative crops
progressively - capitalise on and leverage
back end capability - supply chain solutions
partner - value sharing with upcoming
organised retail - organic marks for ag
product export

• IMPROVE PERFORMANCE OF TEA BUSINESS
• - higher bought leaf
• - improved productivity invest in replanting
• - cost restructuring
• - differentiated plantation marks added
  value capture

20
Funding from Employees

• Equity Contribution proposed for workers is
  Rs.8000 and for staff is Rs. 20000
• To make the participation broad based, the
  company would look at ways and means of
  facilitating investment
• 100 interest free loan to be provided to workers
  / staff repayable over 7 years (Fortnightly /
  monthly installments)
• Repayments have been structured in such a way
  that fortnightly installments works out to be
  Rs.50, which is less than 10 of current take
  home wages.
• With wage increase in coming years, the
  deductions would be less than 8 of their take
  home wages.

21
Initiatives by the New Company

• Enhancing revenues from Non-tea operations in
  land being taken over
• Tying up supply arrangements with global players
  and fast emerging India retail players using the
  advantage of a large land and labour base in the
  fertile State of Assam.
• Consolidating output through purchase
  arrangements with other cultivators in the state.
• Expanding sourcing operations to other regions of
  the country retaining Assam as a base
• Plantation Operations supervisory team has
  relocated to Guwahati which would enable a much
  closer and sharper focus than ever before on all
  aspects of plantation operations.
• Would be the first large tea company to have its
  corporate base in Guwahati

22
Benefits To Employees post Restructuring

• It would empower employees to manage their own
  business and future with a greater dexterity and
  to earn and share better profits and growth
• Restructuring model allows workers to participate
  as owner whilst having all existing rights as
  employees protected
• This would enable
• Promote a culture of entrepreneurship
• Bring change in mind set and upliftment of social
  status
• Current practices of corporate governance and
  Tata Code of Conduct and values would be
  maintained
• Non tea crop would be pursued in an aggressive
  manner leading to high number of new employment
  opportunities in Assam across all categories

23
Tata Teas involvement

• All required support and assistance shall be
  provided to the management of the new company.
• Tata Tea shall have about 20 stake in equity.
• It shall endeavor to see that the new company
  meets the Tata Values in upholding all the
  stakeholders interests and for the protection of
  environment.
• TTL to have off take agreement for teas produced
  by the plantations for 3 -5 years at Auction
  Equivalent Prices
• TTL to continue using the facilities of the
  estate packeting centres
• Welfare Institutions viz. Referral Hospital and
  TTITC, Rowta will be maintained by TTL

24
Avenues of Growth
Thank You