The Hindu Business Line : Tata Tea Q3 net rises 76% on higher volumes

TATA Tea Limited (TTL) on Monday reported a 76.23 per cent rise in profit after tax to Rs 27.44 crore for the quarter ended December 31, 2004, from the previous corresponding Rs 15.57 crore.

Its income from operations was up 18.34 per cent to Rs 239.62 crore (Rs 202.47 crore for the year ago period). Senior officials led by Mr P.T. Siganporia, Managing Director, said at a press briefing that TTL's branded portfolio had performed strongly during the quarter returning a 16 per cent volume growth. This, together with improved realisation and higher export, drove topline growth.

According to them, TTL's future business banks on its branded portfolio, already the source of 80-85 per cent of revenues. The company will progressively de-link from its plantation business. There is a VRS in place for select South Indian plantations, operational viability wherein is tough given high labour cost and unattractive tea prices that dilute the region's better labour productivity.

All options, including prospective plantation sale, will be considered, Mr Siganporia said.

But TTL will first make sure that a better and sustainable business model spanning operations and environment is in place before contemplating exit from any plantations. Globally, tea cultivation is the forte of focused plantation majors or small growers.

TTL may retain some plantations based on whether their teas are replaceable or not.

Thus Darjeeling tea and some strains of Assam tea would appear strategic.

But South Indian teas, which can today be replaced with teas from Vietnam or Indonesia, are not so lucky.

At the consolidated level, the Tata Tea-Tetley combine had a profit after tax of Rs 89.29 crore (Rs 62.30 crore) on income from operations of Rs 806.14 crore (Rs 807.27 crore). The flat topline was attributed to change in pattern for accounting promotion costs in the UK and exchange rate issues.

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