The takeover of Tetley by Tata Tea is likely to double the exports of the latter. Tata Tea is reported to have exported tea worth Rs 700 m in FY2000.
Tata Tea (FY99 Total Income Rs 8,832 m) is the world's largest integrated tea company, accounting for over 8% of the tea grown in India. The company, which is the second largest blender/marketer in the domestic packaged tea segment, operates the largest instant tea EOU outside the United States of America.
Tata Tea has so far been known as an exporter of bulk tea with around 45% of its exports to the Russian market. Despite a good crop in India (in the range of 850 million kgs) over the last two years the company ran into bad debt problems since the Russian market went into a tailspin.
With the takeover of Tetley, Tata Tea’s dependence on the Russian market would decline substantially, since Tetley can be serviced from Tata Tea’s own plantations. (Tetley is the world’s second largest tea brand and is the market leader in the UK and Canadian market.) Further, Tata Tea’s sale of packaged tea would increase to 80% after the takeover.
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