Annual Report & Financial Statements 2009/10 Group Overview p02 Vice-Chairman’s Statement p10 Group Business Review Consolidated Our vision is to be the global leader in branded ‘Good for you’ beverages Peter Unsworth, CEO Performance Review We communicated our intention to Commodity Price & Exchange Pressure operate as one integrated business in June 2009 when announcing our 2008/09 full year financial results. Significant steps have been taken during p13 the year to unite the Group behind a shared goal with a clear strategy to Client to deliver long-term, above average returns update to shareholders. We have continued to invest in our strong brands and find new sources of growth through new routes to market and through our ‘innovation’ product agenda to integrate, transform and build our position in the global ‘Good for you’ delighting consumers with beverages we undertook measures across key beverage market. which are innovative, exciting and good product lines, focusing on value packs for both people and the planet. and increased trade connect in select The global beverage market offers markets. These initiatives, together with significant opportunities for growth. 2009-10 was a year of record prices for new products and markets, have helped Markets for speciality tea, green tea, the tea and coffee industry. The prices of us grow turnover by a very satisfactory ready-to-drink beverages and fruit juices our key tea blends were 15-20 % higher 19% over the prior year. are growing far more quickly than in the previous year, driven mainly than tradition black tea. These new areas by lower crop and some increase in To achieve our ambitions for growth give us opportunity to focus on the domestic demand we have developed a strategy based growing health and wellness segment on product innovation, the creation with convenient products which deliver The strength of our brands allowed us to of global brands, new channels to consumers in a sustainable way. take price increases, to offset the impact and geographies and efficiencies of these higher commodity costs. in our operations. This strategy is Our mission ‘improving the world These higher prices adversely impacted built around the key pillars of brand, through life enhancing sustainable our volume growth. However, with a products, distribution, people, hydration’ evokes our desire to focus on view to mitigate the volume pressures, process and sustainability. Annual Report & Financial Statements for the year ended 31 June 2009/10 05 Annual Report & Financial Statements p24 Highlights Group Operating Income Group Profit before Tax and Exceptional Items Rs 5821 crores Rs 625 crores Global Integration Market leadership in India Performed strongly – share up by 4.7% Launched into Middle East Acquisition gives entry to Russia Performance over Time Total IncomeProfit Before Tax prior to exceptionals 7000 7000 6000 6000 5000 5000 4000 4000 3000 3000 2000 2000 1000 1000 2010 Crores Crores 2009 Rs 0 Rs 0 8 0 8 0 0 09 0 09 -1 -1 7- 8- 7- 8- 200 200 200 2009 200 2009 Annual Report & Financial Statements for the year ended 31 March 2010 Tata Global Beverages 1 Group Overview Mission To make the world a better place through life-enhancing sustainable hydration Vision To be the leading ‘good for you’ beverage company Our company values add up to something unique – a sense of ‘responsible irreverence’ in all that we do 2 Tata Global Beverages Annual Report & Financial Statements for the year ended 31 March 2010 Our strategy is built on six pillars Brands Products & Categories Distribution Strategy People Process Sustainability Annual Report & Financial Statements for the year ended 31 March 2010 Tata Global Beverages 3 Group Overview continued Today we are the second-largest tea company in the world, operating in over 40 countries Our geographic footprint Six sales & marketing regions across the globe Regional Offices & Factories Corporate Headquarters 4 Tata Global Beverages Annual Report & Financial Statements for the year ended 31 March 2010 TATA Global Beverages Consolidated Facts Annualised trunover of approximately $1.5bn Globally integrated – UK-based leadership team Six sales and marketing regions across the globe Global operations and sourcing C. 3,000 employees 5 Annual Report & Financial Statements for the year ended 31 March 2010 Tata Global Beverages 5 Group Overview continued Our mission is to make the world a better place through life-enhancing sustainable hydration Tetley Good Earth In 70 countries around the world, people Good Earth brews goodness into each and enjoy the goodness of a cup of Tetley tea every cup of its premium teas and coffees Tetley’s success extends to non-core At the same time it is good to the earth products, which have been developed to by using some of the greenest suit all cultures, tastes and moods packaging around 6 Tata Global Beverages Annual Report & Financial Statements for the year ended 31 March 2010 Our Major Brands Tata Tea value market share in the branded packet-tea segment Tata Tea Tata Tea has been rated as the second most trusted hot beverage brand in India and accorded ‘Super Brand’ status Tata Tea is the market-leading brand in India Annual Report & Financial Statements for the year ended 31 March 2010 Tata Global Beverages 7 Group Overview continued We are focused on delighting consumers with innovative and exciting beverages Himalayan Eight O’Clock Coffee Himalayan is a premium, lifestyle, Eight O’Clock Coffee is the third largest mineral water brand in India’s top coffee brand by volume in the US retail metropolitan markets coffee market Its unique packaging and brand philosophy It has delivered a robust performance have helped it to break through in a delivering sales growth of over 17% crowded market-place 8 Tata Global Beverages Annual Report & Financial Statements for the year ended 31 March 2010 Sales by Brand T!on T!on has carved a niche for itself in the new ‘good for you’ ready-to-drink Tetley cold beverage sector in India Good Earth Eight O’Clock An energetic launch and sustained Others Vitax youth-centric activities have made Jemca the brand very popular at colleges Tata tea Annual Report & Financial Statements for the year ended 31 March 2010 Tata Global Beverages 9 Vice Chairman’s Statement The Group has delivered an excellent performance for the year with Group turnover up 19% R.K. Krishna Kumar Vice-chairman Results The Group maintains a very strong its brands. It is the strength of these The Group has delivered an excellent balance sheet with net cash of Rs 706 brands that has allowed the Group performance for the year with Group crores (2008/09 Rs 653 crores). As a to record an excellent performance turnover up 19% at Rs 5,821 crores result of this and our strong trading in a year when there have been such (2008/09 Rs 4,874 crores) and Profit performance the directors are pleased difficult economic conditions across before tax and exceptional items also to recommend an increased dividend the globe. up 19% at Rs 625 crores (2008/09 – of Rs 20.0 per share (2008/09 – Rs 17.5 Rs 526 crores). per share). Strategic update Over the last decade we have Exceptional items at Rs 16 crores were In September 2009, in conjunction with consistently made strategic moves to well down on last years’ Rs 730 crores, the European Bank of Reconstruction transform from what was predominantly with last year benefitting by Rs 819 and Development, we acquired a 51% a domestic Indian tea plantation crores of foreign exchange gains on stake in the consolidated group of business to what is now a global surplus cash held in US dollars. Such Suntyco Holding Limited (a Russian branded beverages business. Over 65% currency fluctuations have now been beverage company owning the Grand of the consolidated revenues now come capped by conversion/forward sale of brand). This gives us access to a strong from markets outside India, mainly in US dollar assets into sterling. coffee and tea business in a key market developed retail markets; and over and the results of this company have 90% of the turnover is from branded Consolidated EPS before exceptional been consolidated for the seven products with the balance coming items was higher at Rs 51.07 versus Rs months it has been a subsidiary, from business to business plantation 47.39 in the previous year – up 8%. This generating Rs 255 crores of turnover and extraction activities. Tea constitutes year has been impacted by a higher and Rs 35 crores of operating profit. 71% of the consolidated revenues with effective rate of taxation compared to the balance from Coffee and other the previous year. This was due to a The results also include a full year’s products; five years ago tea represented higher mix of profits from USA, where trading of Premium Foods, a leading nearly the entire Group turnover. there is a higher rate of tax, and certain distribution business in Poland’s adjustments relating to tax rates for growing tea market, acquired at the The tea and coffee markets continue deferred taxation. end of the previous financial year. to grow globally, with higher growth in developing geographies. We continue These results reflect the Group’s to access opportunities beyond strategy to support and invest behind 10 Tata Global Beverages Annual Report & Financial Statements for the year ended 31 March 2010 UK corporate ambient tea and coffee with water While we will pursue disruptive Global Beverages Limited. Our new HQ located and other ‘good for you’ drinks spear innovation in our areas of strength, we name signals both our intent to be truly in the UK heading these initiatives.