Tata Tea Plans To Acquire Gardens In Lanka, Africa

Tata Tea Ltd, in a serious bid to become globally competitive, has chalked out plans for large-scale acquisition of gardens in Sri Lanka and parts of Africa.

The company also plans to acquire gardens in the upper Assam region because of the huge demand for Assam blends of tea in the global market.

RK Krishna Kumar, managing director, Tata Tea, said the company has set a target of achieving a controlling interest in production in at least three countries by 2000.

The focus of Tata Teas business strategy in the future will be to move from being a primary producer of tea to a consumer marketing company. The company will henceforth be directed towards direct consumer sales which again calls for innovations in packaging, distribution and advertising, he said.

 

In Sri Lanka, the company plans to double its existing annual production capacity of 10 million kgs and is presently negotiating with a couple of parties for acquiring gardens.

The acquisitions will be executed by Estate Management Services Ltd, the 49:51 joint venture between Tata Tea and its Sri Lankan partner Watawala Plantations Ltd.

Apart from the controlling interest it already enjoys in Watawala Plantations Ltd, the company also manages the gardens of Kahawatte Plantations Ltd, another Sri Lanka-based company.

Tanzania and Malabi in the African continent are being actively explored for expanding operations.

The scale of operations here will be around 3-5 million kgs and the acquisitions again are likely to be executed through joint ventures.

Africa is being looked at as a potential area of operations because of the recent government policies in the region advocating privatisation, Krishna Kumar said.

Tata Tea does not perceive any problems in mobilising finance for new projects.

The tea major is confident of being able to raise debt in the foreign markets. External commercial borrowings (ECB) and terms loans with foreign denominations are some of the more attractive options.

Tata Tea has an edge over other domestic tea corporates in financing projects because it can lean heavily on the Tata groups resources, he added.