Tata Tea Group

1
Tata Tea Group Annual Results 2005/06
June 7,2006
2
Group Highlights

• Strong operating performance across the Group
• 8 brand volume increase in Indian domestic
  market
• Improved operating margins despite higher
  investments in growth
• Market share improvements in international
  markets
• Favourable impact of South India Plantation exit
• Consolidated Results improve by
• Income - Rs 3151 crores, up by 2
• PBT before exceptional items - Rs 411 crores - up
  15
• PBT post exceptional items - Rs 418 crores up by
  33
• PAT at Rs 299.15 crores up by 39
• EPS at Rs 53.21 - up by 39

3
Tata Tea LtdStrong Financial Performance

• Top-line growth up by 9
• Operating Profit up by 31
• Record PBT before exceptional items at Rs 205
  crores up by 26
• Record PAT at Rs 186.93 crores up by 45
• EPS Rs 33.25 per share up by 45

4
Tata Tea Ltd 12 quarters of continuous
operating profit growthQuarter on quarter
5
Tata Tea LtdStand Alone Performance
6
Tata Tea LtdCompany Financial Review

• Total Income for the year ended March, 2006 at Rs
  1040 crores is 10 higher than the previous
  years figure of Rs 950 crores.
• Increase in brand volumes by 8
• Increase in bulk exports (mainly to Tetley) by
  67 and inclusion of Cochin EOU sales
• Partly offset by
• Decline in auction value and volume mainly due to
  South India exit

7
Tata Tea LtdCompany Financial Review

• The Profit before Tax and exceptional items for
  the year at Rs 205 crores shows an increase over
  previous years profit figure of Rs 162 crores.
• higher brand realizations, lower blend costs and
  higher volumes
• Higher investment income
• Higher crop in North India
• Inclusion of Cochin EOU profits
• Partly offset by
• Lower profitability in Instant tea
• Lower realizations in Plantations

8
Tata Tea LtdFinancial Performance March, 2006
9
Tata Tea LtdOperating Profit Growth 29

• 12 Growth in brand value
• 8 growth in brand volumes
• Improvement in EBITDA 12
• SIPO exit impact
• Stringent cost controls

10
Tata Tea LtdTreasury Operations

• Higher returns from mutual funds by 1.5 points
• Higher returns from long term investments
• Average cost of debt remains at 6 pa despite
  increasing market conditions
• Brand Debtors/sales _at_20 days in line with PY

11
Tata Tea LtdOperational Review
12
Tata Tea Ltd Brand Value Market share
Source All India, AC Nielsen Retail Audit ,
April 2006
ALL FIGS are Moving Annual Totals
13
Tata Tea LtdGrowing.in India

• Good growth of the branded business at 8 volume
  especially in a soft commodity price environment.
• Improvement in garnering value through mix
  changes and pricing.

14
Tata Tea Ltd Growing.in India

• The Tata Tea portfolio has grown by 8 riding on
  a strong performance from all three brands Gold,
  Premium, and Agni
• Tata Tea Premium leveraged youth icon Sania Mirza
  effectively.
• Evolving the positioning of TTP moving from
  physical vitality to emotional/mental rejuvenation

15
Tata Tea Ltd Growing.in India

• Tata Tea Gold continued its impressive
  performance, clocking double digit growth over
  last year helped by the Kurkure consumer
  promotion
• Whilst Agni grew by 14. Agni leaf, which was
  migrated into the Tata Tea Portfolio, has grown
  by an even higher

16
Tata Tea Ltd Growing.in India

• Tetley clocked double digit growth in sales to
  achieve a 30 share of teabag market driven by
  a strong 360 degree innovation programme in
  flavoured tea bags and effective follow the
  consumer initiatives
• Launched a new variant Elaichi Tetley Flavoured
  tea bags in single serve sachets

17
Tata Tea Ltd Growing.in India

• Kanan Devan growth driven by KD Red in Kerala
  which grew in market share from 23.3 to 27
• Chakra Gold progressed well through consistent
  thematic inputs and successful consumer
  promotions.Market share in TN increased from 15.7
  to 17.1
• Gemini retained its strong leadership position in
  Andhra Pradesh.

18
Tata Tea LtdKey Operating Highlights - Others

• North India Plantations
• Record production
• Alternate crop study undertaken
• Reconstruct under progress
• Instant Tea
• Record volume in both throughput at exports
• Tata Tetley
• Cochin EOU amalgamated into Tata Tea

19
Tata Tea LtdWelfare

• North India
• Chubwa Referral Hospitals record performance no
  of patients treated - shows continuous
  improvement and improving revenue streams
• Entire roster of welfare activities fully funded
  and enabled
• South India
• General Hospital, High Range School and Srishthi
  turnaround strategy for self sustained
  operations in progress

20
The Tetley Group Annual Performance Review
2005/06
21
Financial Highlights

• Sales up 7.6
• Operating profit (pre exceptionals) down 5.4,
  though up 2.7 including once off factors
• PAT up 58.8 driven by exceptional credit and
  lower interest costs
• Operating cash flow up 13.4

22
Key Financials
23
Sales

• Growth of 7.5 in sales over 04/05
• Good Earth contributes 3.8m
• Sales and share growth in all major markets
• Majority of growth comes from drive lines as
  investment behind growth agenda beings to deliver
  sales return
• Sales from Bangladesh and Pakistan JVs, not in
  statutory turnover, are up 98 and 43
  respectively

198.2m
131.6
47
19.6
193.0m
125.2
37.7
30.10
207.6m
127.9
45.8
33.4
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Growing ..in Canada

• Launched new flip-top tea cartons
• record black tea brand share 46.3
• growing further in 2006
• Extended range in green tea
• record brand share
• full marketing programme for 2006
• Launched Tetley Chai concentrate
• 32 share after nine months
• Extending distribution in 2006

25
Growing .in Great Britain

• Held brand leadership and grew brand share
• Successfully test-marketed Tetley Ice Tea
• national launch in 2006
• major supermarket listings agreed
• Increased brand share in green tea
• 8 share achieved growing further in 2006
• Held Category Partner status with major
  supermarkets

26
Growing ..in Eastern Europe

• Double digit growth in Poland for second
  successive year
• new product introduction
• distribution led focus
• Market leadership in Earl Grey 35 share
• Acquired the Jemca brand in Czech
• market leader with brand share of 27
• strong presence in black and fruit herbal
• distribution strength across modern and
  traditional trade
• access to cost effective manufacturing facility
• opportunity to launch the Tetley brand

27
Growing in Pakistan Bangladesh

• Bangladesh
• strong JV partner
• doubled our business in 05/06
• market share of 5
• focus on the tea bags opportunity
• serious player in Bangladesh
• Pakistan
• 5th largest Tetley market in volume terms
• aggressive JV partner with strong distribution
• sales of over 2m kgs
• challenger approach

28
Sales
15.8
21.6
29
Pre Exceptional Operational Profit

• Current year published is 35.1m

36.2m
37.1m
35.1
30
Pre Exceptional Operational Profit

• Current year published is 35.1m
• But one off and non recurring issues give a
  different underlying picture
• - Canadian pack format re. launch hit current
  year

36.2m
37.1m
36.8m
31
Pre Exceptional Operational Profit

• Current year published is 35.1m
• But one off and non recurring issues give a
  different underlying picture
• Canadian pack format re. launch hit current year
• Eaglescliffe factory had efficiency issues, now
  resolved

36.2m
37.1m
37.5m
32
Pre Exceptional Operational Profit

• Current year published is 35.1m
• But one off and non recurring issues give a
  different underlying picture
• Canadian pack format re. launch hit current year
• Eaglescliffe factory had efficiency issues, now
  resolved
• Legal provisions were released in prior year into
  pre exceptional operating profit benefit in last
  year

36.2m
36.5m
37.5m
33
Pre Exceptional Operational Profit

• Current year published is 35.1m
• But one off and non recurring issues give a
  different underlying picture
• Canadian pack format re. launch hit current year
• Eaglescliffe factory had efficiency issues, now
  resolved
• Legal provisions were released in prior year into
  pre exceptional operating profit benefit in last
  year
• So underlying operating profit has risen to
  37.5m when our investment behind growth has
  increased by 2.5m

36.2m
36.5m
37.5m
34
Exceptional Items and JV Income- PBIT

• Key Issues
• Gain on closure of pension scheme to future
  accrual benefits the year by 1.9m
• Loss last year on sale of share of Tata Tetley JV
  to Tata Tea
• Improvement in profits of JVs , in particular,
  Empirical in the US
• PBIT up 4.3m

35
Exceptional Items and JV Income- PBT

• Interest 5.8m down
• 3.2m benefit from the write off last year of
  issue cost following refinance
• 3.3m from lower interest and lower debt
  following the refinance
• 0.7m, interest costs from debt used to acquire
  Good Earth
• PBT up 10.1m

36
Exceptional Items and JV Income- PBT

• Tax
• Low tax last year with relax of provisions
• Impact of high PBT this year
• Dividend of 3m paid again
• PAT UP 7.0M

37
Cash-flow

• Operating cash-flow of 38.6m up 13.4 driven by
• Depreciation increase as investment in new
  packing formats comes through
• Great working capital performance
• Lower spend on reorganisation projects
• Last years operating profit was restated for
  FRS17, which is a non-cash adjustment
• Company continues to generate strong cash flows

38
In Summary

• Investment behind growth continues
• Organic growth from drive lines, new markets and
  acquisitions key contributors
• Underlying operating profit increases
• PBT and PAT up 59
• Strong cash flow
• Jemca now acquired growth strategy gathers pace

39
Tata Coffee

• Annual Performance Review 2005/06

40
Tata CoffeePerformance Highlights

• Turnover at Rs 191 Crores down by 5
• EBIT at Rs 37.45 Crores up by 13
• Operating Profit before Exchange Adjustment
  Exceptional items at 26.66 Crores up by 10
• PAT at Rs 22.32 Crores lower than previous year
  due to lower exceptional items
• Earnings per share at Rs. 17.90

41
Tata Tea Ltd

• Consolidated Accounts-2005/06

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ConsolidationGroup Companies
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Tata Tea LtdConsolidated Accounts of the Group
44
Way ForwardPTS
45
CHALLENGER BRAND EIGHT CREDOSTHE WAY WE DRIVE
OUR BUSINESS

• Break with your immediate past
• Bring in the light house identity
• Assume thought leadership of the category
• Create symbols of re-evaluation
• Sacrifice
• Over commit
• Use advertisng and publicity as a high leverage
  asset
• - Become idea centred and not consumer centred
• - Flying unstable

46
Tata Tetley Strategic Focus

• Strengthen our business in existing geographies
• Expansion into new geographies
• New product development and building business in
• Black Tea
• Fruit and Herbal Infusions
• Ready to Drink Teas
• Out of home
• Building operational capability to enable the
  commercial business to achieve growth
• Management Strength

47
Thank You