Tetley Posts Operating Profit Under Tata Control

The Tetley group of Britain, which was taken over by the Tatas last year in what was the largest-ever overseas acquisition by an Indian company, has posted operating profits in the first year under Tata control.

Tata Tea Great Britain, the special purpose vehicle incorporated for the acquisition of Tetley, also had a positive cash flow at POUNDS6.83 million, while operating profits stood at POUNDS11.99 million.

However, Tata Tea GB posted losses at the net level, at pounds 13.67 million, due to high exceptional items of POUNDS13.56 million. The group turnover of the tea major's UK arm stood at POUNDS246.3 million (approximately Rs 1,150 crore).

The Tetley group had posted operating profits before exceptional items of POUNDS25 million in the year 1999-00, the year prior to the Tata takeover, on a turnover of POUNDS323 million.

The figures are not comparable with the current year's as part of the Tetley group's assets, including the coffee business in North America, has been sold.

The Tatas paid interest charges of POUNDS26.11 million during the last year on loans for the pound 271 million acquisition.

In addition, Tata Sons and Tata Tea will be investing another POUNDS30 million in Tata Tea GB, of which Tata Tea will be putting in POUNDS10 million.

Tata Tea GB's results were supported by strong performances in the UK, France and Canada. Despite the pressure on prices of finished products in the UK, the volumes of Tetley products increased by 8 per cent over the previous year.

Tata Tea (GB) has also provided for a goodwill of POUNDS0.48 million. The company said that an amount of POUNDS11.98 million for goodwill and POUNDS1.59 million for restructure expenses has also been written off increasing losses as per consolidated accounts to POUNDS13.68 million.

As part of the plans to derive greater synergies, Tata Tea is toying with the idea of launching various Tetley products in India before the end of the current financial year. The Tetley group has a strong market position in the US, Canada, Australia and eastern Europe and is a market leader in the UK and Canada.

Tetley has five production centres -one in UK, two in the US, one in Australia and one in India and all these centres have latest technologies and facilities for tea packaging and Tetley's history of innovations include the original tea bag and the draw string bag.