The Hindu Business Line : Tata Coffee to raise short-term loans to fund estate buys

TATA Coffee Ltd plans to raise short-term debt to fund the acquisition of six tea and coffee estates from Tata Tea, says the company Managing Director, Mr M.H. Ashraff.

Tata Coffee is acquiring 4,300 hectares from Tata Tea for Rs 55 crore.

These high-yielding top estates are located in Kerala and Tamil Nadu and produce some 6 million kg of tea and about 500 tonnes of coffee.

"We are also exploring other options to fund our other overseas expansion plans that include setting up an instant coffee plant in Uganda," Mr Ashraff said.

"The acquisition of the six estates will not only transform Tata Coffee into one of the biggest plantation companies in the country, but will also increase shareholder value and make Tata Coffee a force to reckon with in the plantation industry," he said

Tata Coffee has two small tea estates in Coorg and Chikmagalur districts of Karnataka that produce some 1.2 million kg. With the proposed acquisition that is set to conclude by end-August, Tata Coffee's total tea holdings will increase to around 4,000 hectares, whereas the total coffee holdings would increase to over 7,000 hectares, according to Mr Ashraff. "The acquisition also gives Tata Coffee an opportunity to grow an alternate crop," Mr Ashraff said explaining the rationale behind the buy-out. Growing an alternate crop acts as a hedge during future downturn in commodity prices, he said, adding, "whenever tea has done well, coffee has been bad and vice-versa."

The expertise of Tata Coffee in plantation management would enable it to run the newly acquired plantations without any constraints and manage the same with existing overheads, he added.

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