Tata Tea Ltd

&
The Tetley Group
Performance for the Quarter
December, 2004
January 25,2005
 Presenter Panel

P. T. Siganporia (Managing Director – Tata Tea)

K. Pringle (Executive Vice Chairman - The Tetley Group)

L Krishna Kumar (Senior Vice-President Finance & I.T. – Tata Tea)

P. Unsworth (Managing Director, Supply & Support - The Tetley Group)

 Group Highlights for the Quarter

 Strong operating performance across the Group

 16% 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 operating margins
 Improved Plantation Operations

 Results in
 Consolidated Income from operations of Rs 806 crores in line with PY
 Consolidated PAT of Rs 89.29 crores - up 43%
 Consolidated EPS of Rs 14.65– up by 37%
 Outline of Presentation

 Tata Tea Ltd Performance Review (PTS & LKK)

 The Tetley Group Performance Review (PU)
 Tata Tea Consolidated Financials (LKK)
 Way Forward (KP)
 Questions & Answers
 Tata Tea Ltd

Performance Review – December,2004

(PTS & LKK)

 Value Market share

TTL
18.9 +3%
19.5

29.6
HLL 30.2
+2%
Brands

6.1

Other Brands 5.7

-7%

30.8
Local Players 28.9
-6%
0 5 10 15 20 25 30 35

Value Market Share %

November'04 April'04

Source : All India, AC Nielsen Retail Audit , November

ALL FIGS are Moving Annual Totals 2004
 Brand Performance Highlights

 Tata Tea ranked the second most trusted

beverage brand in Brand Equity Survey

 Year to date brand volumes grow by 14%

compared to the corresponding period of
the previous year

 Major portfolio brands restaged

 Brand Performance – Nine Months Comparison

Tata Tea
 Volume Growth rate of 22%
 Tata Tea Gold commands a market share
of 1.8% within 13 months of launch

Agni
 Brand volume growth of 9% post restaging
brand end of previous financial year
 Brand Performance – Nine Months Comparison

Chakra Gold
 Achieves 9% volume growth against steep
competition in the market

Kanan Devan
 Kanan Devan Strong launched
successfully in end-October – sale base at
30% of mother brand
 Sale of mother brand increases
concurrently
 Brand Performance – Nine Months

Gemini
 7% volume growth

Tetley - “The new face of tea”

 De growth of brand addressed with
relaunch during December
 Enters specialty tea market with new
flavoured tea bags
 Flavoured tea bag strategy to drive
consumption and growth of Tetley brand
 Plantation Performance – Nine Months

 Gross turnover increases by 18%

 Improved profitability from operations
 Higher realisations reflect both quality
improvement and crop shortfall
 Crop declines by 10% due to adverse
weather conditions
 Improved capacity utilisation through
bought leaf operations
Tata Tea Ltd

Financials
 Strong Financial Performance – Q3

 Top-line growth of 18%

 Operating Profit up by 78%
 PBT at Rs 35.93 crores up by 65%
 PAT at Rs 27.44 crores up by 76%
 EPS Rs 4.88 per share – up by 76%
 Operating Profit Growth +78%

 Brand volumes grow unabated

 Operating expenditure higher
17.36 due to higher sales and
2002 increased purchased teas for
own brands to cater to growth
 Improvement in Plantation
Operations due to improved
18.86
2003 realisations, higher
productivity despite lower
crop
 Stringent cost controls all
33.58 across the Company
2004

0 10 20 30 40 50 60 70
Rs/crores
 Treasury Operations

 Term debt reduced by 9% to Rs 178 crores

 Cost of debt declines from 6.72 % pa in the
previous financial year to 5.4 % pa
 Net interest cost at lower levels despite decline in
interest income
 Currency gains
 Debtors/sales @23 days compared to 29 days in
the previous year
 Financial Performance –December,2004

Q3 Nine Months
Actuals Variance % Actuals Variance %
Rs/cr Rs/cr Rs/cr Rs/cr
Income 242 37 18 702 94 15
Expenses 204 (23) (13) 559 (54) (11)
PBIT 38 14 56 143 40 39
Interest 2 - - 7 - -

PBT 36 14 65 136 40 42

Tax 9 2 37 33 10 43

PAT 27 11 76 103 30 41
 Improved Operating Performance

June’03
June’04– –Rs
Rs181
206crcr +14%
June’04 – Rs 202 cr

Sept’03 – Rs 202 cr +16%

1

Sept’04 – Rs 235 cr

Dec’03 – Rs 202 cr +19%

Dec’04 – Rs 240
December’03 – Rscr
202 cr

0 50 100 150 200 250

Income from Operations

 Improved Operating Performance

June’03 – Rs 18 cr
+56%
June’04 – Rs 28 cr

Sept’03 – Rs 36 cr
1
+47%
Sept’04 – Rs 53 cr

Dec’03 – Rs 19 cr
December’04 – Rs 34 cr
+79%
Dec’04 – Rs 34 cr

0 10 20 30 40 50 60

PBT from Operations

 The Tetley Group

Performance Review– December,2004

(PU)
 Shares grow again
in competitive markets

 Continued improvement in volume market shares in

competitive markets.

 Market volume decline in traditional tea markets

 Changed promotional environment affecting net sales,

particularly in GB.

 Speciality segment continues to grow, Tetley an increasingly

important player.

 Continued focus on cost control.

 Slightly behind last year on EBIT and PAT Performance

 Financial Performance – 9 months

 Group reported sales running 7% behind last

year (5% after eliminating FX translation
losses)

 Nearly 2% improvement to cost of sales,

margins improve

 EBIT down 6% ,PAT at 12.2m down 9%

 Net cash position £11.9m is £7.9m less than

last year – refinancing opportunity
 Key Financials – 9 months

Actuals Actuals % Actuals %

(2002/03) (2003/04) Growth (2004/05) Growth

Volumes 34,750 35,065 1 33,487 (5)

(mn kgs)

Sales 173,019 174,045 1 162,575 (7)

EBIT 29,086 30,788 6 29,070 (6)

PAT 13,649 13,407 (2) 12,168 (9)

 EBIT – 9 months

Key issues:
•7% reduction in reported sales
partially offset by 11% reduction
29.1 in cost of sales
2002
•Changed promotional mix
results in lower cost

30.8 •Additional investment in new

2003 advertising campaingns in GB
and France –£ 1 mn y-o-y
•Continued focus on overheads
2004 29.1 delivers £0.5m benefit
•Investment in growth

20 22 24 26 28 30 32
£m
 Profit After Tax – 9 months

Key issues:
•Increased non-recurring
expenditure, benefits coming
13.6 through overheads
2002
•Impact of exceptional
benefits last year (nearly £2m)

2003 13.4 •Reduced interest charges

due to debt repayment (down
5%)

2004 12.2 •Reduction of 3.9% in tax

cost - one off impact

5 7 9 11 13 15
£m
 Net Cash Flow- 9 Months

Key issues:
•Decrease in overall working
2002
23.3 capital
•Increase in stock holding to
take advantage of favourable
2003 11.5 market conditions
•£14m payment of debt
Voluntary debt payment
2004
-2.3 -2.3
• Higher levels of capital
investment for future benefits
-3 2 7 12 17 22
£m
 Market Performance

 GB 9% lower reported sales and 6% lower EBIT than

2003/04 , new canister range now over £1m in sales and
growing
 US – aggressive competitor activity but improved
volumes up 7%
 Canadian EBIT remains 7% ahead of last year due to
improved cost of sales, overhead savings and some A&P
phasing benefits
 Australia – Steady growth in volumes (up 7%) and G.
Margin (up 15%) continue to deliver EBIT at record
levels
 International Tea – volumes up 10% and EBIT is 14%
ahead of last year
 Market Shares Improvements

 GB - maintained record
10.80
market share for third
US
11.30
quarter at 28.6% (up
1.5ppts from one year ago)
 Canada - continued
11.30
France growth in specialty market
11.30
share (21.8%), total market
growth for segment 9%
20.3
Australia  Australia - market share to
rea

20.5
20.5%
A

 France - maintained
20
Canada record 11.3% market share
21.8
 US - increased
market share to 11.3% (up
27.1
GB from 10.8% one year ago)
28.6

0 5 10 15 20 25 30

2004 2003
 Progress against our strategic goals

 aim: to strengthen our business in existing geographies

 result: record market shares in GB, Canada, US, France and Australia

 aim: new product and business development in range of tea categories

 result: New GB Special Teas range exceeding £1m in sales

 aim: building supply and support capability

 result: additional capital investment to deliver improved efficiencies

AND
energy and finance invested in the future
- more brand and product developments planned this year
- further geographic expansion
 Tata Tea Ltd

Consolidated Accounts

LKK
 Group Companies

Nature of Holding Company Ownership %

Directly or
through a
subsidiary
Subsidiary Tata Tea (GB) Ltd,UK 98.58
Companies Tata Coffee Ltd, India 50.67
Tata Tea Inc, USA 100.00
Tata Tetley Ltd, India 99.29
Associate Estate Management
Companies Services Ltd, Sri Lanka 49.00
Rallis India,Ltd 24.52
 Profit before Tax +37 %

 Profit improvement
 Stringent cost control
87.50
87.49  Interest cost savings
December'03
 Improved efficiencies

 EPS up by 37% at Rs 14.65

December'04 119.57
119.57 per share

0 20 40 60 80 100 120

Rs/crores
 Financial Performance – December,2004

Q3 Nine Months
Actuals Variance % Actuals Variance %
Rs/cr Rs/cr Rs/cr Rs/cr
Income 806 (1) - 2268 80 4
Other 1 (13) (-) 14 (14) (-)
Income
Expenses 666 33 5 1889 (19) (1)
PBIT 141 19 18 393 47 12
Interest 30 5 12 95 3 3
Extraordi 8 8 - 9 10 -
nary
PBT 119 32 37 307 60 24
Tax 30 (5) (20) 88 (13) (17)
PAT 89 27 43 219 47 27
 Improved EPS

Quarter ended December Nine Months ended December

+37% +33%

2 2003- Rs 10.68 2
2003- Rs28.06
2003 28.60

10.68 14.65 28.06 37.97

Period Period

37.97
1 2004- Rs 14.65 1
2004- Rs 37.97

0 2 4 6 8 10 12 14 16 0 5 10 15 20 25 30 35 40
s

s
R

R
 Rs/share

300.00
320.00
340.00
360.00
380.00
400.00
420.00
440.00
460.00
480.00
1/1/2004 500.00
1/16/2004
2/13/2004
3/1/2004
3/31/2004
4/16/2004
4/30/2004
5/31/2004
6/14/2004
6/21/2004
7/1/2004
7/24/2004
8/2/2004

Date
8/26/2004
8/31/2004
10/25/2004
11/1/2004
11/22/2004
11/29/2004
12/7/2004
Share Price Movement vis-a-vis Sensex

12/13/2004
12/20/2004
Tata Tea Ltd – Share Price Movement

12/27/2004
1/3/2005
1/10/2005
1/20/2005
4500.00
5000.00
5500.00
6000.00
6500.00
7000.00

Te a
Ta ta

Pts
S e ns e x
Way Forward

(KP)
Turnover Mix-Nine Months 2004/05

Others
2%

Investment Income
1%

Spices etc
1%
Bulk Tea
Coffee/Instant Coffee 9%
5%

Branded Tea
82%
 Group Highlights for the Quarter

 Strong operating performance across the Group

 16% 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 operating margins
 Improved Plantation Operations

 Results in
 Consolidated Income from Opeartions of Rs 806 crores in line with
PY
 Consolidated PAT of Rs 89.29 crores - up 43%
 Consolidated EPS of Rs 14.65– up by 37%
 Tata Tetley 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 Teas
 Out of home
 Building operational capability to enable the
commercial business to achieve growth
 Management Strength
Challenging for leadership in tea

across the world

Questions & Answers
Thank You