Tata Tea to change name, integrate operations

Tata Tea has also started integrating its business units and could eventually merge its wholly owned overseas subsidiaries such as Tata Tea (GB) Ltd, Tata Tea Inc. and Eight O’Clock Coffee Co. into one company
Aveek Datta


Kolkata: Having transformed itself from a plantation company to a global beverages maker aiming for a $10 billion (Rs48,700 crore) turnover in five years, Tata Tea Ltd is now going to change its name, chairman Ratan Tata said.

“Tata Tea is no longer a good description of what the company is,” he told shareholders at the company’s annual general meeting on Tuesday.

The firm is likely to unveil its new name in two-three weeks, according to vice-chairman R.K. Krishna Kumar. “The new name would reflect the sparkle of a new company—a nutrition and wellness company. The new name could even be (in) a foreign language,” Kumar said.

Tata Tea has also started integrating its business units and could eventually merge its wholly owned overseas subsidiaries such as Tata Tea (GB) Ltd, Tata Tea Inc. and Eight O’Clock Coffee Co. into one company. “It is our strategic intention to integrate our overseas businesses in which we have 100% ownership,” Kumar said.

Asked if Tata Tea was planning to merge with itself its Indian subsidiaries such as Mount Everest Mineral Water Ltd and Tata Coffee Ltd, Kumar said: “Our vision is to have one cohesive company.”

After restructuring, Tata Tea will have six profit centres—the US, Canada, South America, the UK, Russia and the Indian subcontinent. Though its registered office continues to be in Kolkata, Tata Tea’s corporate headquarters has been moved to London.

The company’s shares lost 1.31% to close at Rs933 on the Bombay Stock Exchange on Tuesday, while the bourse’s benchmark Sensex index fell 115 points, or 0.74%.

“Tata Tea is still seen by a large section of investors as a plantation company,” said Rajesh Agarwal, director, research, CD Equisearch Pvt. Ltd, a Kolkata-based broking firm. “Because of the cyclical nature of the tea business, Tata Tea’s shares still do not get the kind of valuation that a beverage or an FMCG (fast-moving consumer goods) company gets.”

Tata Tea, which had a consolidated turnover of Rs4,907 crore, or a little over $1 billion, in the fiscal year that ended on 31 March, expects sales to top $10 billion in five years, Kumar said. “The growth will not be entirely organic,” he said, adding that Tata Tea, which is “sitting on a war chest of Rs1,700-1,800 crore of liquid cash”, is tracking acquisition opportunities in the US.