The Hindu Business Line : Tata Tea gets ready to exit from all plantations

Also to quit Lankan joint venture Watawala Plantations Ltd
Planning a greenfield project in China
To expand in the beverage space and access new markets

Kolkata , Feb. 21

AFTER the success of the Kanan Devan model in its southern estates, Tata Tea Ltd has decided to exit from all plantation activities. Currently, it is preparing a similar formula for its gardens in the North-East.

In line with this policy, the company will also get out of its Sri Lankan joint venture, Watawala Plantations Ltd, said Mr R.K. Krishna Kumar, Vice-Chairman. (It is a joint venture with Estate Management Pvt Ltd. Set up in 1992 and spread over 12,442 hectares, 41 per cent of the plantation is tea, 18 per cent rubber, and eight per cent palm.)

China venture: According to Mr Krishna Kumar, Tata Tea is looking at a global canvas to increase its presence. It would be in the beverage sector but not just restricted to tea. The company is considering setting up a greenfield project in China.

"We have decided to step back from the plantation sector but in a phased manner. We will not sell off our assets. We feel that it should go to the workers and their co-operatives but we will remain attached to it," he told newspersons.

In this context, he said the company was preparing a Kanan Devan-type model for the Assam-based tea gardens. Tata Tea will hold less than 20 per cent stake in that company.

"The model will remain same but we will develop on it by adding some more facility and variety. We would like to complete the whole process by the end of the next fiscal."

According to him, the strategy of exiting the plantation business has also paid off as the company's bottomline has improved, as reflected in the first nine months of 2005-06. Mr Krishna Kumar, however, preferred not to quantify this improvement.

On foreign acquisitions, Mr Krishna Kumar said within the next six months the company would take a final decision on a China greenfield venture, but categorically stated that it would not be plantation activity.

New activity: Mr P.T. Siganporia, Managing Director, said it would be in the "tea derived space" and the activity would be something totally new to the company.

Both of them did not give any more details on this project.

Mr Krishna Kumar said the beverage industry was growing at a brisk pace in the developed countries. "We would like to expand in the beverage space and access new markets. We are looking at multiple targets in the frontier markets."

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