tata global bevarages
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8/3/2019 Tata Global Bevarages
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TATA GLOBAL BEVARAGES
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Introduction
Tata Tea was formed in 1983.
Headquartered in Kolkata, India. Set up in 1964 as a joint venture with UK-
based James Finlay.
Tata Tea has been involved in the tea extract business for last 40 odd years.
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Ground breaking f acts.
Worlds second largest.
Largest in India, UK, Canada, Czech Republic.
Second largest in U.S.A. 70 million kilograms of tea in India.
controls 54 tea estates,
ten tea blending, packaging f actories employs around 59,000 people.
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Bought leaf factories & co-operatives to change the structure of green leaf
production
Un-remunerative operations are 1st given the opportunity to transform and
if not hived off
Re-organisation of 20 tea estates in clusters of 5
µjaago re¶ campaign.
Exiting barista.
Introducing TiON drink .
Business Level Strategies
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Mergers and acquisitions
In 1983, Tata Tea bought the stake belonging
to the James Finlay group to f orm the
individual entity Tata Tea
In 2000. Tetley tea £271 million ($432 million)
buyout.
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Acquisitions and JV¶SEntity Year of
formation
Status Role
Tata Tea, Inc,
USA
1987 100 per cent
subsidiary
To process and market instant tea from
its facility in Florida, based on sourcing
of products from facility at Munnar
Consolidated
Coffee Ltd
(Tata Coffee Ltd)
1991 Acquisition of 52.5
per cent stake
To diversify into coffee via a company
which wasAsia's largest seller of coffee
Estate
Management
Services (P)
Limited,
Sri Lanka
1992 Joint venture To manage 22 plantation companies
involved in tea, rubber, coconut and
palm oil, that were privatised by the Sri
Lankan
government
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Tata Tetley, India
(merged with Tata
Tea with effect from
April 1, 2005)
1993 100 per cent subsidiary Kochi-based EOU that services the
branded business of specific Tetley and Tata
Tea markets outside India
Asian Coffee Ltd
(later merged with
Tata Coffee)
1995 Acquisition of 55 per
cent stake
To get into selling instant coffee globally
Watawala
Plantations
Limited, Sri Lanka
1996 Acquisition of 49 per
cent stake through
EMSPL
Production and marketing of tea, oil palm
and rubber in Sri Lanka
Tata Tea (GB)
Limited
2000 100 per cent subsidiary Special Purpose Vehicle (SPV) established
for the acquisition of Tetley, UK
Tetley Clover Pvt
Ltd.,
Pakistan
2003 50:50 joint venture of
Tetley with Lakson
group in Pakistan
To import and sell tea in Pakistan as well as
build a tea blending factory inBaluchistan
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Tetley ACI,
Bangladesh
2003 50:50 joint venture of
Tetley withAdvanced
Chemical Industries (ACI)
in Bangladesh
To distribute Tetley's products in
Bangladesh
Good Earth, USA 2005 Acquisition of 100 per
cent stake by Tetley
Establish Presence in the US and
acquisition of strong product portfolio
Jemca, Czech
Republic
2006 Acquisition of 100 per
cent stake by Tetley
Market Leadership in Czech republic with
a product portfolio which goes across both
mainstream and speciality
8¶ O Clock Coffee,
USA
2006 Acquisition of more than
50 per cent stake, Tata
Coffee
and Tata Enterprises
Overseas
To help establish global presence
in coffee and facilitate movement
up the value chain
Glaceau, USA 2006 30 per cent minority stake
alongwith Tata Sons
Presence in unfolding crossover space of
the beverages market through enhancedwater
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f inancial perf ormance
Prof it 2009/10 : 391 CR
Prof it 2010/11 : 180 CR
±
REASONS WE CAME ACROSS:- Higher wages.
Payment of loans.
Higher commodity charges.
Expensive raw material.
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Income
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Exceptional items
Our estimate on actual net prof it is :
161-89(exceptional items)=71Cr.
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Earning per share
Total earning per share in 2010-2011- Rs.4.11/- Dividend paid- Rs.2/-
Face value of share- Rs.1/-
200% dividend.
HEAD Quarter 1 : 2011 Quarter 1 : 2010
Total operating income 1467 1378
Net prof it 161 46
Earning per share 2.66 0.58
EPS excluding exceptional
items
0.74 0.58
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Stock Movement
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Price to earning ratio
P-E ratio =stock price/ earning per share.
EPS is of last 4 quarters.
High p-e ratio = positive expectations TGB P/E ratio in june 2011=15.05.
TGB current P/E=17.2
BSE standard- ± Above 20= overvalued.
± 5 to 20 = good.
± Below 5 = risky.
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Problems that plaque TGB.
High raw material cost.
Expensive power.
Labor unrest in Maoist aff ected areas.
Inability to increase branded tea price in
ref lection to actual commodity price.
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Coff ee commodity price
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David vs goliath
Tata global beverages annual turnover $1.5
billion (USD). (2009/10).
Lipton-brooke bond:- $4 billion (2009/10)
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Competitors with their Market Share & Profit:
Market Cap.
(Rs. cr.)
Net Profit
(year 2008-09)
Tata Tea 5,239.07 159.06
Mcleod Rus 2,196.78 88.79
Tata Coffee 593.84 18.64
Assam Company 503.36 -2.82
Bombay Burmah 411.65 -13.88
Jayshree Tea 326.29 13.88
CCL Products 206.06 19.00
Harrisons Malay 191.84 6.04
Dhunseri Tea 179.18 16.66
Duncans Ind 50.83 -38.61
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Alliances f or f uture growth
Acquired 31%* on a f ully diluted basis of Rising Beverages LLC which
manuf actures and markets a range of vitamin and f lavour enhanced water
using unique powder dispensing
technology, under the Activate brand Signed JV with Pepsi-Co in the area of
non-carbonated, RTDs f ocused on
health and enhanced wellness. Named
NourishCo Beverages
Tata Global Beverages Ltd & KeralaAyurveda Limited sign MOU to form
JV f or Product Development
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Upcoming products
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Why buy TGB?
Restructured debt.
2011 q1 prof it of 166 Cr compared to 2010/11
entire year prof it of 180 Cr. Payment of 200% dividend f rom past 3 years.
High earning per share.
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Q uestions????