1 TATA Tea Group 2008/2009 Results Presentation Peter Unsworth

1

TATA Tea Group2008/2009 Results Presentation

Peter Unsworth

TATA Tea Group 2008/092

Creating a global leader in

branded good for you beverages

Five businesses being operationally

integrated and transformed to make

one global beverage group

Introducing The Tata Tea Group


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


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



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


The Pillars of our Business Strategy


Products & Categories

Moving from a tea and coffee

company to a wider beverage

business spanning

six product categories


Brands

A new central marketing

function driving global brands

management and innovation


Distribution

Expansion into new

geographies underway –

Russian entry recently

announced


People

A single management team and

six consumer/customer focused regions


Process

Gaining scale economies through common systems


The Business Strategy – Products & Categories


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 drinkin India

Innovation Drives Category Growth


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

Expansion of Product Portfolio


The Business Strategy - Brands


Global Focus Brands

The Business Strategy - Global & Regional Brands

Regional Focus Brands

Tata Coffee


Share Growth in Tea Brands in Core

MarketStrong Tea Performance Relative to Peers

Core markets include India, UK, US, Canada, Australia, Poland, France, Czech RepublicSource: Euromonitor 2008

Core Markets Tea Value Share %

%


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

Global 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

Regional Brands Performance Highlights


Focus on Brands

Ability to drive marketing excellenceacross different countries and cultures

Here’s a flavour...


Focus on Brands

The Growth Story of Tetley Redbush

In the UKTetley Redbush

is the No. 2 brandin the UK

with a 26%market share

One of thefastest

growing brandsin the UK tea

segment

Following the success of the 40’s

pack –larger pack sizes and new variants

have been introduced

Introductioninto the

Canadianmarketin 2008


Focus on Brands

The Impact of the “Jaago Re Campaign”


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


The Business Strategy - Distribution


Design of Tata Tea Group Organisation

Now Six Regions:

GB & AfricaEurope & Middle EastUSACanada & South AmericaSouth AsiaAsia Pacific


Regional Highlights

GB and Africa:Retained UK tea categorypartnership with Tesco

Acquired CTC givingwest coast presence in South Africa


USA:Recent new CostCo and Walmart* listings

South Asia:Launched T!on and extended distribution of Himalyan

Regional Highlights


Europe & Middle East:Entry into Russian market

Canada & South America:Launch of Tetley RTD Iced Teainto over 6,000 conveniencestores across Canada

Regional Highlights


Russia Market Entry

Russia is the #2 tea market in the world

Recent 51% acquisition of Grand

A major Russianpackaging and distributioncompany in coffee and tea


The Business Strategy - People


Building a global organisation

New single management structure in place

New and distinct company values defined

Integrated Global Reward Strategy


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


The Business Strategy - Process


World class processes continue to be built

Development of global information systems to support global integration

Consolidated global financial systemin place

Drive global efficiencies

Balanced scorecard for strategy implementation


Outcomes of Strategies – The Global Picture

The place to be for exceptional talent

Global distribution coverage

Global consumer brands

Multi category portfolio

World-class business processes


The Tata Tea Group

A global leaderin good for you beverages

THANK YOU

37

TATA Tea Group2008/2009 Financial Results

L Krishna Kumar, CFO



Strong performance in difficult economic & trading conditions – but resilient core portfolio

Increase in input costs largely recovered through price increases

Benefits from effective management ofsterling currency risk



Continued improvements in product portfolio and new launches

Initial costs of restructuring absorbed

Strong brand growth in our target categories


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


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


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)


Strong Brand Growth for 2008/9

Coming from Tata Tea and Eight O’Clock Coffee

Good Earth1.4%

Vitax 1.6%Jemca 0.7%

IndianTea Brands

21.1%

Source : Internal

Eight O’Clock16.9%

Tetley42.2%

Others16.1%

Good Earth1.4%

Vitax 1.4%

Jemca 0.7%

IndianTea Brands

19.4%

Eight O’Clock14.9%

Tetley48.5%

Others13.7%


Branded share of business increases

Source : Internal

Tea72.65%

Coffee16.58%

Plantation& Extraction

9.95%

Others 0.82%

Categorywise Sales Breakup 2007-08 Categorywise Sales Breakup 2008-09

Tea73.95%

Coffee14.31%

Plantation& Extraction

11.31%

Others 0.43%


US, South Asia and Canada driving sales growth

Indian Rs Crores

Regions 2008/09 2007/08 Variance %

GB & Africa 1,208 1,272 (64) -5%

South Asia 1,301 1,049 252 24%

Canada & South America 303 271 32 12%

US 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%


Robust Balance Sheet PositionMarch 09 March 08

Sources of FundsShareholders Funds 4675 4442Loans 2431 2609Deferred Tax 48 37Total 7154 7088Application of FundsFixed Assets Goodwill 3027 2938 Others 798 772Investments Long Term 341 364 Current 10 1027 Cash/Cash equivalents 2963 1793 Recoverable from NIPD 213 293 Net Operating Working Capital 204 265 Provisions/Pension liabilities (410) (381)Miscellaneous Expenses to the extent not written off

8 17

Total 7154 7086Net Debt +755 +504

Indian Rupees Crores


Performance Over Time

In Rs Lacs In Rs

300

250

200

150

100

50

0

6000

5000

4000

3000

2000

1000

0

2008/092007/082006/07

532

4336

436

4005

393

4874


Significant Increase in Dividend Payout

Dividend Quantum PerformanceCurrency:Indian Rupees Lakhs

2004/5 2005/6 2006/7 2007/8

5667

92

216

Exceptional

Dividend

124

92

2008/9

108


Standalone Performance

Tata Tea Ltd

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

PBT before exceptionals

Up 4%

Operating EBITDown 15%

Operating incomeUp 20%

Exceptional expenditure in the current year reduces PBT to Rs 229 crs. PY had profit on sale of North India Plantation Operations

PBTDown 41%


Standalone Performance

Tata Coffee GroupOperating 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 salesStrong 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%

PBT before exceptionals

Up 16%

Operating EBIT Up 1%

Operating incomeUp 21%

Exceptional expenditure relating to US reorganisation reduces PBT to Rs 70 Crs, down 2%

PBTDown 2%


Strategy in Place and Journey Started

Investment focus will be brands

Entry into wider beverage category

Focus on six regions

Products, brands, distribution, peopleand processes

Focus on the branded business and development of global brands

Broader branded portfolio and expansion into new categories

Wider global footprint – global not international

Integrated global business


Summary of Year End Results

Strong performance in difficult conditions

Strong, well financed business platform

The journey has begun to becoming :

A global leaderin good for you beverages!

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THANK YOU

Documents

1 TATA Tea Group 2008/2009 Results Presentation Peter Unsworth