Tata Tea

1
Tata Tea The Tetley Group Tata Coffee Annual
Results 2004/05
June 10,2005
2
Annual Review

• Tata Tea Ltd Annual Review Consolidated Results
• P. T. Siganporia (Managing Director Tata Tea)
• L Krishna Kumar (Sr Vice-President Finance
  I.T. Tata Tea)
• The Tetley Group Annual Review
• P. Unsworth (Managing Director, Supply Support
  - The Tetley Group)
• Tata Coffee Annual Review
• M.H. Ashraff (Managing Director)
• M D Kumar ( Chief Financial Officer)
• The Way Forward
• K. Pringle (Executive Vice Chairman - The Tetley
  Group)

3
Group Highlights

• Strong operating performance across the Group
• 14 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 Plantation Operations
• Results in
• Consolidated Income from operations - Rs 3077
  crores, up by 4
• Consolidated PBT before exceptional items - Rs
  357 crores - up 25
• Consolidated EPS prior to exceptional items - Rs
  43.95 up by 27
• Consolidated EPS post exceptional items at Rs
  38.33 up by 10

4

• Tata Tea Ltd
• Annual Review 2004/05
• (PTS LKK)

5
Value Market share
6
-
17
-15
Source All India, AC Nielsen Retail Audit ,
April 2005
ALL FIGS are Moving Annual Totals
6
Performance against Strategy

• Aim To grow Tata Tea brand value share
• Market share of Tata Tea Brand moves from 9.7 to
  10.9
• Tata Tea ranked the second most trusted beverage
  brand in Brand Equity Survey
• Brand volume growth by 22 over previous year
  lead by
• Complete restage of Tata Tea premium
• New price point packs
• Future Strategy Continued innovation growth of
  Tata Tea to enhance value

7
Performance against Strategy

• Aim Increasing the Rate of Innovation
• Tetley brand restagedIntroduction of Tetley
  flavoured tea bags
• New Kanan Devan strong launched in Kerala, market
  share jumps from 21 to 25.6
• Future Strategy New initiatives projects will
  fuel growth

8
Performance against Strategy

• Aim Innovating growth Tata Tea Gold

Growth in market share
Source All India, AC Nielsen Retail Audit ,
April 2005
Future Strategy New initiatives projects will
fuel growth
9
Performance against Strategy

• Aim Systemic address of consumer insight
• New brand communication launched for Chakra Gold
  supported by outdoor visibility campaign for
  strengthening brand postioning
• New Agni price point packs 11 growth over PY
• Agni migration strategy initiated
• Future Strategy Continuous consumer
  understanding driven business plans

10
Performance against Strategy

• Aim Address distribution penetration
• Specific sales initiatives to improve rural
  access
• Increased focus on key accounts
• Gemini a brand which has gt50 market share in
  Andhra Pradesh saw a 5 volume growth
• Future Strategy Enhance distribution
  opportunities

11
New Launches/Re launches
12
Plantation Restructuring

• A path breaking sustainable business model
• Kanan Devan Hills Plantation Company a newly
  formed company set up and owned by a cross
  section of all categories of estate employees
  takes charge of 16 estates in Munnar w e f April
  1,2005
• Continuing involvement by Tata Tea through a tea
  buy back arrangement and subordinated loan
• Remodeling of remaining estates/undertakings in
  South India under address

13
Initiatives on Corporate Social Responsibility

• Tata Group signatory to the Global Compact of the
  United Nations
• Company committed to sustainability of all
  endeavours economic, environmental employee
  related
• Community development, Employees welfare and
  Environment Conservation initiatives
• Energy plantation activities in South India
• Medical camps, health education family planning
  programmes
• Shristi complex in Munnar engaged in providing
  rehabilitation to children
• Childcare programme
• HIV AIDS awareness programmes

14
Tata Tea LtdFinancials
15
Strong Financial Performance

• Top-line growth up by 15
• Operating Profit up by 72
• PBT at Rs 162 crores up by 35
• Record PAT at Rs 129 crores up by 40
• EPS Rs 22.93 per share up by 41
• Dividend _at_ 100, payout 50

16
Operating Profit Growth 72

• 14 Growth in brand volumes
• Improved auction realisations
• Stringent cost controls
• Interest declines by 15

Rs/crores
17
Treasury Operations

• Year end debt reduced by 8 to Rs 165 crores
• Cost of debt declines from 7 pa to 6 pa
• Net interest cost at lower levels despite decline
  in interest income
• Debtors/sales _at_20 days compared to 26 days in the
  previous year
• Stock levels higher in view of higher plantation
  production in March05 and conscious decision to
  carry bought teas to feed brand demand

18
Financial Performance March, 2005
Q4 includes Rs 7 crores of non recurring items
19
The Tetley Group Annual Review 2004/05

• PU

20
Highlights

• Underlying sales up in all markets except GB
• Strong market shares
• Successful new product launches
• Establishing International presence
• Underlying growth in profitability
• Strong cash-flows underpinning re-financing

21
Key Financials 03/04 restated

• 2003/04 re-stated to facilitate like for like
  comparison
• Additional weeks removed
• Foreign exchange adjusted
• Exceptional items removed.

22
Key Financials

• Normalised sales up in all countries except the
  UK
• Underlying normalised operating profit up 3.2
  despite costs of launches and investment in
  advertising
• Underlying PAT up 17.5 driven by lower interest
  and tax costs

23
Sales

• UK sales suffered from greater competition for
  promotional slots and downward pressure on
  margins given low tea prices
• US sales held up well in a difficult market
• In the rest of the world
• Russia up 71.4
• Australia up 10.7
• Poland up 12.6
• Canada up 3.6
• Western Europe up 7.4

24
Operating profit

• Like for like operating profit is up 3.2.
• Downward pressures include volume in GB and mix
  in the US.
• Lower tea costs, fewer promotions and overhead
  savings have enabled increases in advertising and
  profit growth.
• Investment in new product launches and geographic
  expansion maintained.

25
Non-operating performance

• 2004 results normalised to remove impact of 5
  weeks, FX, asset sales and exceptionals.

26
Non-operating performance (cont.)

• 2005 re-stated in the same way

27
Non-operating performance

• Leaving the following underlying factors
• JV income reflects investment in growth markets.
• Interest reflects lower level of net debt and
  refinancing benefit.
• Tax reflects mix of profits and treatment of
  interest to Tata Tea.

28
Cash-flow

• Operating cash-flow of 34.0m.
• Trade debtors are higher driven by high relative
  levels of activity at the end of the year.
• Inventories are higher as a consequence of tea
  bought in at attractive prices and higher levels
  of finished goods.

29
Re-financing

• Strong cash flows since re-financing in March
  2003 with 61m of cash for debt service
  generated.
• Enabled re-financing of facilities of 160m in
  February 2005.
• Key benefits will be
• Lower annual interest costs of 2.5m
• Greater operating flexibility
• Adverse exceptional impact on 04/05 of 3.6m.

30
Pensions

• During the year
• the final salary scheme was closed to future
  accruals
• scheme assets re-weighted towards bonds
• lower levels of volatility expected
• company began to pay additional contributions to
  pay off the deficit over ten years
• Results presented under SSAP24
• PL charge of 2.8m vs 3.3m in 2003/04
• costs of funding the closed scheme provided for
  and amortised over 10 years
• offset by impact of investment performance
• FRS17 disclosures
• Deficit has increased from 18.1m to 18.4m
• Lower bond yields and provision for costs
  offsetting investment performance

31
Market share performance (vol)

• A robust performance in established markets
• Retained GB brand leadership at 27.5
• Canada Specialty market leader black tea at
  42.3
• France - growing market share of teabags at 11.3
  
• Australia Record 21.4 share of total tea

32
International Growth
Europe - Estonia 7 volume share growing
Russia 2000 outlets
Bangladesh 20,000 outlets
Pakistan 2.5 value share premium market
South Africa recent launch Tetley brand
33
New product launches
34
Managing our business responsibly

• Understanding and improving our impacts
• Social
• - safe water provision in tea growing region of
  Malawi
• - local brand/charity partnerships
• Ethical
• - leading member of Ethical Tea Partnership
  (ETP)
• Environmental
• - Environment Policy focusing on waste energy
  
• management
• - ISO 14001 certification for all UK sites

35
Performance against strategy

• Aim to strengthen our business in existing
  geographies
• result retained key leadership in UK Canada,
• record shares in other established markets
• Aim expansion into new geographies
• result consolidated positions in Russia,
  Bangladesh and Pakistan.
• Launched into South Africa.
• Aim new product and business development in
  range of tea categories
• result new special teas, RTD products, OOH
  systems
• Aim building supply and support capability
• result cost saving initiatives saving 1.5m of
  manufacturing costs.
• All while maintaining our level of investment in
  growth initiatives at 7.5m

36
Tata Coffee

• Annual Review 2004/05
• (MHA MDK)

37
Performance Highlights

• Financial
• Turnover at Rs 203 crores up by 13
• PBT before exceptional items at Rs 26 crores up
  by 45
• Record PAT at Rs 30 crores up by 77
• Earnings per share moves up from Rs 13.72 per
  share to Rs 24.21 per share
• Dividend_at_65, payout _at_ 32
• Strategic
• Acquisition of High Hill Coffee a 100 EOU
  producing soluble coffee

38

• Financial Performance, March 2005

Rs. Crores
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Tata Coffees Businesses
TCL Businesses
Soluble Coffee
Marketing
Plantations
Coffee
Spray Dried
Brands
Vending
Agglomerated
Pepper
Freeze Dried (In Progress)
Timber
40
TCL Coffee BusinessCoffee 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 Flavour of India-Fine Cup Awards
• Cost consciousness
• Rationalised employee strength
• Stringent cost controls

41
TCL Coffee BusinessMoving up the Value chain

• Coffee Brands
• Mr Bean- present in all southern states
• Vending
• Soluble Coffee
• Major player in export of soluble coffee
• Foray into Freeze Dried production planned
• Acquisitions to continue on every available
  opportunity

42
Other PlantationsMoving up the value chain

• Pepper
• Emphasis on value addition to continue
• Offerings extend across white, black dehydrated
  pepper
• State of art capex to meet stringent export norms
• Timber
• R D efforts lead to high value offerings
• Fire retardant
• Sound absorbing
• Finger jointed

43
Initiatives on Corporate Sustainability

• Through the Coorg Foundation
• Financial assistance to educational institutes
• Professional scholarships to deserving students
• The only plantation company to have obtained an
  SA 8000 certification
• UTZ KAPEH certification obtained
• Swastha rehabilitation of children
• Medical/Health camps/training programmes/mobile
  clinics AIDS awareness programmes
• Kodagu Model forest trust formed to protect
  biodiversity and sustainable utilisation of
  natural resources

44
Tata Tea Ltd

• Consolidated Accounts-2003/04

LKK
45
Group Companies
46
Tata Tea LtdConsolidated Accounts of the Group
(Like to like)
47
Tata Tea Ltd Share Price Movement
48

• Way Forward
• (KP)

49
Turnover Mix-2004/05
50
Group Highlights

• Strong operating performance across the Group
• 14 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 Plantation Operations
• Results in
• Consolidated Income from operations of Rs 3077
  crores, up by 4
• Consolidated PBT before exceptional items of Rs
  355 crores - up 25
• Consolidated EPS prior to exceptional items - Rs
  43.95 up by 27
• Consolidated EPS post exceptional items at -
  38.33 up by 10

51
Challenging for leadership in tea across the
world
52

• Questions Answers

53
Thank You