The Hindu Business Line : Tata Coffee to focus on value-added timber products

Timber plans
Tata Coffee has entered into timber value addition for manufacturing plywood and block boards under the brand name "Tata Conswood".
The company has designed and developed fire retardant boards and sound absorbing panels and is manufacturing them on a small scale.
It believes that the new products would add significant value to its low-end timber and will be the future growth driver for the profitability of the timber division.

Bangalore , Aug. 31

Tata Coffee, as a part of its plan to optimise the utilisation of its captive timber resources, has entered into timber value addition for manufacturing plywood and block boards under the brand name "Tata Conswood". The timber is harvested on sustainable basis every year as part of estate cultural practice and maintaining the ecological balance. Tata Coffee's estates are spread over 18,454 acres (7,471 hectares) across Karnataka, Kerala and Tamil Nadu.

Mr M.H. Ashraff, Managing Director, Tata Coffee, said the company was focussed on developing value-added timber products and the valuation of timber resources was done internally. The company has designed and developed fire retardant boards and sound absorbing panels and is manufacturing them on a small scale. These products are being procured by Tata Motors for use in building coaches, he said.

Further, Tata Coffee is in the process of setting up a larger facility in Mysore to commercially produce fire check doors and wooden flooring, Mr Ashraff said. "We plan to invest about Rs 9 crore in the Mysore facility, which should be operational by the end of this financial year," Mr Ashraff said.

Tata Coffee believes that the new products would add significant value to its low-end timber and will be the future growth driver for the profitability of the timber division, which saw a 210-per-cent growth in profits in FY2006.

Coffee contributes to around 85 per cent of Tata Coffee's revenues, while the rest comes from pepper, tea and estate supplies such as timber.

Timber resources higher than market cap

Tata Coffee Ltd, the largest plantation company in Asia, has valued its captive timber resources at Rs 500 crore.

Interestingly, this is higher than its current market cap of Rs 410 crore.

Traditionally, timber has been an integral part of the coffee cultivation in India as the commodity is largely grown under shade.

Trees like rosewood, silver oak etc are widely grown in plantations to provide shade for coffee bushes.

Besides being a source of revenue for coffee growers in the form of timber, firewood and edible fruits, these shade trees are also used for growing black pepper.

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