International business of TATA global beverages
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Transcript of International business of TATA global beverages
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TATA GLOBAL BEVERAGES
Deepa AgarwalMayur Bhagwat
Neha BaokarKunal Garad
Mayur MohiteShruti RailkarKunal Thakur
Akanksha Wattal
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DOMESTIC BUSINESS
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Domestic Scenario of Tea Industry
1962 to 1990-Pre Liberalisation Era Rising Input cost, High taxes and Dwindling margins
Tata Tea incorporated in 1962 as Tata Finlay J.V
1983 Finlay stake acquired-Tata Tea ltd
Decided to move from commodities market to branded tea market E.g. Kannan
Devan, Agni, Gemini and Chakra Gold
In 1987, Tata Tea set up a fully owned subsidiary, Tata Tea Inc., in the USA.
1989-52% stake Karnataka based Consolidated Coffee Ltd(Tata coffee Ltd)
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contd…
Post 1990-Post liberalization Era In 1992-J.V with Tetley
In 1994-Acquired 64.5% stake in Asian Coffee
JVC with Lankan partner acquired 20 tea estates
Acquisition of the Tetley Group 2000
In 2006, Tata Tea acquired Eight O'Clock Coffee, a U.S. based coffee
producer from Gryphon Investors for $220m
On 30 January 2012, 50-50 joint venture called Tata Starbucks Ltd
Current Tea Industry
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DOMESTIC SCENARIO-TATA TEA
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INTERNATIONAL BUSINESS
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PESTEL ANALYSIS
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• Government policy• Foreign law• Stability of the governmentPolitical
• Interest rates• Tax
Economical
• 800 millions cups of tea consumed globally• Green tea is preferred due to its health benefits• Innovation on tea productsSocial
• Providing unique products• Safety Factor
Technological
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PORTERS FIVE FORCES
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PORTERS MODEL
Rivalry :• Approximately 700 tea companies • Unorganised players • Industry growth rate 2%
Bargaining power of suppliers :• Large number of producers • Low switching cost
Bargaining power of Buyer :• Large number of buyers•Other available option
Threat from substitute :•Coffee•Pepsi• Energy drinks
Threat from new entrants:• 100 % FDI • Untapped rural market
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STRATEGY
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MERGER
• The first ever leveraged buy out , largest cross border acquisition by an Indian Company.
• The acquisition of Tetley made Tata Tea the second biggest tea company in the world.
• Vertical Integration
Tetley gets access to Tata Tea’s gardens and production base and the latter gets Tetley’s premium brands and global distribution network
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Structure of Merger
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FINANCE
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Post Merger Financial Performance
sales dropped by 8.3%
Rs 621.58 crore from Rs 677.86 crore
operating profit dropped down by 19.37%
Rs 121.43 crore from Rs 150.60 crore
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Financial Restructuring
• Producing tea company to selling tea company
• Tata tea decreased its
– total wage payment by 12.5%
– provident fund payment by 43%
– welfare payment by 40%
– Employee strength from 58,888 workers to 34,596 workers
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Revenue by Geography
Geography Sales Revenue (Rs. Lakhs)
India 150816.83
UK 123942.34
USA & Canada 144671.83
Rest 65356.48
Total 484787.48
31.11
25.5729.84
13.48
Revenue %
India
UK
USA & Canada
Rest
Source: http://www.tataglobalbeverages.com/docs/document-manager/tata_fact_sheet-v15.pdf?sfvrsn=0
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OPERATIONS
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MANUFACTURING PROCESS
Plucking
Rolling
Firing
Cooling
Packing
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STRATEGIC BUSINESS UNITS
NIPDSIPDPTD ITD
IBD
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RECOMMENDATION AND
CONCLUSION
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Recommendation and Conclusion
•Exploiting Rural markets
•Differentiation on the basis of quality
•Tea houses in tea consuming countries
•Promotion of Tata Global beverages products at Starbucks
•Promoting products like iced tea in countries where soft
drinks are consumed
•Forming JVs with competitors
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