TATA Tea Group
2008/2009 Results Presentation
Peter Unsworth
1
Introducing The Tata Tea Group
Creating a global leader in
branded good for you beverages
Five businesses being operationally
integrated and transformed to make
one global beverage group
TATA Tea Group 2008/09
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Led by a Single Management Team
Peter Unsworth – CEO Tetley Group
Percy Siganporia – MD Tata Tea, Chairman MEMW
Hamid Ashraff – MD Tata Coffee
L Krishna Kumar – Chief Financial Officer
Nalin Miglani – Chief HR Officer
John Nicholas – Chief Marketing Officer
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Key Highlights for 2008/09
Strong performance with resilient core
categories in difficult economic and trading
conditions
Product portfolio expands
Strong brand growth
in our target categories
Integration and transformation
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Key Highlights for 2008/09
Group operating income up 12%
at Rs 4874 crores
Group PBT before exceptional up 21%
at Rs 531 crores
Group PBT lower by 39% at Rs 1256 crores
as compared PY figure of Rs 2060 cr*
* PY figure include one time profit on sale of EBI amounting to Rs 1608 crores
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The Pillars of our Business Strategy
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Products & Categories
Moving from a tea and coffee
company to a wider beverage
business spanning
six product categories
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Brands
A new central marketing
function driving global brands
management and innovation
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Distribution
Expansion into new
geographies underway –
Russian entry recently
announced
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People
A single management team and
six consumer/customer
focused regions
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Process
Gaining scale economies
through common systems
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The Business Strategy – Products & Categories
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Innovation Drives Category Growth
Water: Expansion of Himalayan water
range into more cities in India
RTD: National launch of Tetley Iced Tea
following successful test market in
Canada
National launch of Tetley Infusions (iced
tea concentrate sachets) in Canada
Test market launch of T!on juice drink
in India
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Expansion of Product Portfolio
Tea: National launch of Tetley Red
Tea in Canada
National launch of Good Earth
Organic teas in UK
Coffee: National launch of Good
Earth Organic Coffee in USA
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The Business Strategy - Brands
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The Business Strategy - Global & Regional Brands
Global Focus Brands
Regional Focus Brands
Tata Coffee
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Share Growth in Tea Brands in Core Market
%
Strong Tea Performance Relative to Peers
Core Markets
Tea Value Share %
Core markets include
India, UK, US,
Canada, Australia,
Poland, France,
Czech Republic
Source: Euromonitor 2008
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Global Brands Performance Highlights
Record brand shares in both Canada
and France
launched into UK and Canada (Tea), US
(Coffee)
Premium, Agni and Gold all exhibiting
strong growth post the Jaago Re
campaign and despite increased
consumer pricing
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Regional Brands Performance Highlights
strong gains in both rate of sale and
distribution
in continued growth after brand relaunch
awarded ‘Product of the Year’ by Polish
consumers
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Focus on Brands
Ability to drive marketing excellence
across different countries and cultures
Here’s a flavour...
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Focus on Brands
The Growth Story of Tetley Redbush
In the UK
Tetley Redbush
is the No. 2 brand
in the UK
with a 26%
market share
Following the success
of the 40’s pack –
larger pack sizes and
new variants have been
introduced
One of the
fastest
growing brands
in the UK tea
segment
Introduction
into
the Canadian
market
in 2008
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Focus on Brands
The Impact of the “Jaago Re Campaign”
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Focus on Brands
Eight O’Clock Coffee 100% Colombian Drives Brand
Growth
Source: *IRI, 52 weeks ended
3/22/09 **Internal sales data F’09
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The Business Strategy - Distribution
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Design of Tata Tea Group Organisation
Now Six Regions:
GB & Africa
Europe & Middle East
USA
Canada & South America
South Asia
Asia Pacific
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Regional Highlights
GB and Africa:
Retained UK tea category
partnership with Tesco
Acquired CTC giving
west coast presence
in South Africa
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Regional Highlights
USA:
Recent new CostCo
and Walmart* listings
South Asia:
Launched T!on and
extended distribution of
Himalyan
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Regional Highlights
Europe & Middle East:
Entry into Russian market
Canada & South
America:
Launch of Tetley RTD Iced
Tea
into over 6,000
convenience
stores across Canada
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Russia Market Entry
Russia is the #2 tea market
in the world
Recent 51% acquisition of
Grand
A major Russian
packaging and distribution
company in coffee and tea
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The Business Strategy - People
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Building a global organisation
New single management
structure in place
New and distinct company
values defined
Integrated Global Reward
Strategy
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US Restructuring well underway
Centralized HQ for three US businesses
Cross fertilization of ideas across tea and coffee
brands
Management and administration is consolidated
reducing cost
Full integration expected to be realised by end of
2009/10
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The Business Strategy - Process
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World class processes continue to be built
Development of global information systems to
support global integration
Consolidated global financial system
in place
Drive global efficiencies
Balanced scorecard for strategy implementation
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Outcomes of Strategies – The Global Picture
Multi category portfolio
Global consumer brands
Global distribution coverage
World-class business processes
The place to be for exceptional talent
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The Tata Tea Group
A global leader
in good for you beverages
THANK YOU
TATA Tea Group 2008/09
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TATA Tea Group
2008/2009 Financial Results
L Krishna Kumar, CFO
37
Key Highlights for 2008/09
Strong performance in difficult economic & trading
conditions – but resilient core portfolio
Increase in input costs largely recovered through price
increases
Benefits from effective management of
sterling currency risk
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Key Highlights for 2008/09
Continued improvements in product portfolio and
new launches
Initial costs of restructuring absorbed
Strong brand growth in our target categories
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Performance 2008/09
Group operating income up 12% - growth in brand
sales, price increases and favourable currency
Group PBT before exception up 21% - Cost
increases offset by interest savings
Cost increases mainly on commodities, growth
initiatives like water launch, brand launch/support
in US, UK and Canada
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Performance 2008/09
Other cost increases – market driven impact on domestic
defined benefit retirement schemes
Group PBT lower mainly on account of one off items
One off items in the CY-exchange gain on surplus cash Rs
814 Crs (realised component Rs 471 Crs) actuarial provisions
in UK Rs 54 Crs, last year gain on sale of EBI shares Rs
1607 Crs
EPS Rs 113 (Rs 250) EPS excluding exceptional items Rs
47.87 (Rs 41.50) reflecting improvement in underlying
performance
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Performance for 2008/9
Currency: Indian Rs Crores
2008/09
2007/08
Variance
Net Operating Income
4,874
4,336
538
EBIT
552
617
(66)
PBT before Exceptionals
531
437
94
Exceptional Items
725
1,622
(897)
PBT
1,256
2,059
(803)
PAT
832
1,906
(1,074)
Group Consolidated Net Profit
701
1,543
(842)
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Strong Brand Growth for 2008/9
Coming from Tata Tea and Eight O’Clock Coffee
Brandwise Sales Breakup 2007-08
Indian
Indian
Tea Brands
Tea Brands
20.6%
19.4%
Indian
Tea Brands
22.9%
Indian
Tea Brands
Jemca 1%
21.1%
Vitax 2%
Jemca 0.7%
Jemca
0.7%
Vitax 1.6%
Vitax
1.4%
Others 8.1%
Tetley Tetley
48.5% 51.6%
Others
Eight 'O Clock
13.7% 15.9%
Good Earth
1.4%
Earth
Eight Good
O’Clock
1.4%
14.9%
Brandwise Sales Breakup 2008-09
Others
8.8%
Jemca 0.7%
Vitax 1.6%
Tetley
Tetley
42.2%
45.9%
Eight 'O Clock
18.4%
Others
16.1%
Good Earth
1.4%
Good
Earth
Eight O’Clock
1.5%
16.9%
Source : Internal
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Branded share of business increases
Categorywise Sales Breakup 2007-08
Others
0.43%
Plantation
& Extraction
11.31%
Coffee
14.31%
Categorywise Sales Breakup 2008-09
Others
0.82%
Tea
73.95%
Plantation
& Extraction
9.95%
Tea
72.65%
Coffee
16.58%
Source : Internal
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US, South Asia and Canada driving sales growth
Regions
2008/09
2007/08
Variance
%
GB & Africa
1,208
1,272
(64)
-5%
South Asia
1,301
1,049
252
24%
303
271
32
12%
1,132
913
219
24%
Europe & Middle East
307
282
25
9%
Asia Pacific
125
121
4
3%
Total Other
498
428
70
14%
Total Group
4,874
4,336
538
13%
Canada & South America
US
Indian Rs Crores
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Robust Balance Sheet Position
Sources of Funds
Shareholders Funds
Loans
Deferred Tax
Total
Application of Funds
Fixed Assets
Goodwill
Others
Investments
Long Term
Current
Cash/Cash equivalents
Recoverable from NIPD
Net Operating Working Capital
Provisions/Pension liabilities
Miscellaneous Expenses to the extent not written off
Total
Net Debt
March 09
March 08
4675
2431
48
7154
4442
2609
37
7088
3027
798
2938
772
341
10
2963
213
204
(410)
8
7154
+755
364
1027
1793
293
265
(381)
17
7086
+504
Indian Rupees Crores
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Performance Over Time
In Rs Lacs
In Rs
6000
300
4874
5000
250
4336
4005
4000
200
3000
150
2000
100
1000
50
393
436
532
0
0
2006/07
2007/08
2008/09
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Significant Increase in Dividend Payout
Dividend Quantum Performance
216
Currency:
Indian Rupees Lakhs
Exceptional
Dividend
108
92
124
92
67
56
2004/5
2005/6
2006/7
2007/8
2008/9
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Standalone Performance
Tata Tea Ltd
Operating income
Up 20%
Operating EBIT
Down 15%
PBT before exceptionals
Up 4%
PBT
Down 41%
Optg income of Rs 1379 Crs for the year compared to Rs
1153 Cr in the prior year. Reflective of growth in brands
and price increases
Strong brand performance with recovery of commodity cost
increases and lower export profitability, Retiral benefits cost
increases driven by market conditions. EBIT at Rs 142 Crs
Investment income including dividends from Group
companies results in PBT at Rs 239 Crs
Exceptional expenditure in the current year reduces PBT
to Rs 229 crs. PY had profit on sale of North India
Plantation Operations
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Standalone Performance
Tata Coffee Group
Operating income
Up 21%
Operating EBIT
Up 1%
PBT before exceptionals
Up 16%
PBT
Down 2%
Operating income of Rs 1121 Crs compared to Rs 925 Crs
in the prior year. Strong branded sales in the US coupled
with favourable Fx translation and higher plantation sales
Strong brand performance offset by investment behind
‘Good Earth’ launch, lower export profitability translates
to a growth of 1%. EBIT at Rs 148 Crs
Loan restructuring drives lower interest costs results in
PBT before Exceptional items at Rs 83 Crs up 16%
Exceptional expenditure relating to US reorganisation
reduces PBT to Rs 70 Crs, down 2%
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Strategy in Place and Journey Started
Focus on the branded business and
development of global brands
Investment focus will
be brands
Broader branded portfolio and expansion into
new categories
Entry into wider
beverage category
Wider global footprint – global not international
Focus on six regions
Integrated global business
Products, brands,
distribution, people
and processes
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Summary of Year End Results
Strong performance in difficult conditions
Strong, well financed business platform
The journey has begun to becoming :
A global leader
in good for you beverages!
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THANK YOU
53