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Saturday, August 20, 2011

Tata Global hikes stake in Rising Beverages of the US

This story first appeared in DNA Money edition on Thursday August 11, 2011.

Tata Global Beverages Ltd has increased stake in The Rising Beverages Company LLC through its UK subsidiary.

Rising Beverages is a US-based performance beverage and bottled water manufacturer that sells products under the brand Activate.

Tata Global, the world’s second-largest tea company, had in October last year made a $21 million investment in the US firm for an undisclosed minority stake.

“During the first quarter of the current financial year, our international subsidiary has increased investments in Rising Beverages. Our holding in the company currently stands at 43.1%, calculated on a fully diluted basis. The subsidiary also has an option to further increase the stake in the future,” said Percy Siganporia, managing director, Tata Global Beverages Ltd.

“The incremental investment has been made based on achievement of certain milestones set while making the earlier investment,” Siganporia said.

He did not disclose the details of existing and incremental investments made in the company or comment on the possibility of acquiring a controlling stake going forward.

In another development, Tata Global has discontinued the TiON brand, which the company launched in Chennai sometime in 2009, marking its foray into the cold beverages segment.

“The product did not meet the set matrix envisaged by the management at the time of its launch and hence a decision was taken to drop it from the portfolio of products in the Indian market,” said Siganporia. The brand was pulled out of the market last quarter, he said.

Tata Global’s current offerings in the Indian market include Tata Tea, Tetley and natural mineral water brand Himalayan.
Owing to increased volatility in the commodities market, the company had taken a single-digit hike in one of its products, Tata Tea Premium, towards the end of June. The impact of this price increase, according to the company management, will be seen in the coming quarters.

For the first quarter of this fiscal, Tata Global’s consolidated net profit was up a whopping 253% at Rs161 crore even as consolidated operating income rose just 6% at Rs1,467 crore.

The profit growth was mainly on account of an exceptional gain of Rs89 crore from sale of non-core assets —- sale of investments made in stocks of group and non-group companies.

“The growth in business has been witnessed primarily because of the volumes, while value growth has been very minor at present. However, with the increase in prices in June this year, we will start seeing some value growth happening post second quarter,” said Siganporia.

Asked if the company was looking at introducing any of its international brands in the Indian market, he replied in the negative.

The company’s international portfolio includes brands like Good Earth and Eight O’clock coffee.

Siganporia also did not comment on the status of the company’s joint venture with Pepsi, saying the details would be announced in due course.

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