Tata Tea eyes American cuppa

Tata Tea is now gearing for an acquisition even bigger than Tetley and is in talks for a company and product acquisition with brand presence...

Tata Tea is now gearing for an acquisition even bigger than Tetley and is in talks for a company and product acquisition with brand presence in both North and South America.

Speaking at the 42nd AGM of the company, Chairman Ratan Tata explained that the company was hanging on to its sizeable cash balance to build a war chest ‘‘for acquisitions here and abroad’’, looking at both companies and brands. The company is currently sitting on free reserves to the tune of about Rs 970 crore.

Later, he told mediapersons that negotiations were on for an acquisition spanning both North and South America. Vice-Chairman, R.K. Krishnakumar, explained that the company is proposing investments at two levels, which would be larger than Tetley in today’s context. The acquisition will be a combination of product and company.

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The company is also eyeing acquisition of mid-sized companies in the US and South America. It may be recalled that the company acquired Tetley in 2000-03 involving an investment of about Rs 1,500 crore. The acquisition catapulted Tata Tea to the global league, with considerable presence in Europe.

Krishnakumar said the process of getting out of tea production is underway in Tata Tea’s North Eastern gardens within the current fiscal. ‘‘We are trying to develop alternate revenue streams in these gardens such as fish culture,’’ he added. The idea is to evolve a model improving on the Munnar experiment, before the company exits the production business in these parts.