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BROADBASING BUSINESS: Mr Ratan Tata, Chairman, Tata Tea Ltd, addressing the 42nd annual general meeting in Kolkata on Tuesday - A. Roy Chowdhury

Kolkata , Aug. 9

TATA Tea Ltd is zeroing in on a $1-billion overseas acquisition of either a brand or company or both with a strong presence in the US or Latin America during the next six months.

A war-chest worth Rs 500 crore had already been created by the company, but senior officials are not worried about funds, as liberal foreign exchange regulations had created several options for the company.

According to Mr R.K. Krishna Kumar, Vice-Chairman of Tata Tea, the acquisition would bring growth to the company in the next two years and it would be carried out jointly by Tata Tea and Tetley.

"We have not yet identified the company, but we are extensively scanning the companies where there is an opportunity. We are hoping to strike a deal in the short term," he told reporters after attending the company's 42nd AGM.

Elaborating further on the proposed acquisition, he said that it would be several times bigger than that of Tetley, which was acquired in 2000 at $475 million (£271 million).

"There are two ends of the acquisition spectrum. At one end we are looking at a brand, which is strong in speciality and ready-to-drink teas in the US. At the other end we are targeting mid-size companies," he said.

A recent agency report stated that Tata Tea could be eyeing the Twinings business of Associated British Foods Plc. However, Mr Krishna Kumar did not confirm this report. Instead he told Business Line: "I said we are looking at acquisitions but we are nowhere in identifying the company."

Earlier at the AGM, a special resolution received shareholders' approval, which enabled the board to invest more than Rs 500 crore. However, fund raising is not a problem for Tata Tea.

In this context, Mr Krishna Kumar cited the example of recent Tata acquisitions of VSNL, Daewoo and Natsteel. "There are several options of raising funds," he said.

He further said that the acquisition would help Tata Tea to develop as a food company with a strong presence in beverages and coffee. "We would be like an FMCG but we would not be selling detergents or similar other products," he said.

While addressing the shareholders, Mr Ratan Tata, Chairman, Tata Tea, spoke of the company's focus on acquisitions to broadbase its business. He expected "some years of buoyancy" in the tea sector.

When queried whether Tata Tea would carry out another round of restructuring of its operation in North India similar to that of the south, Mr Krishna Kumar ruled it out because dynamics of one tea estate varies from the other.

Both Mr Tata and Mr Krishna Kumar said that Tata Tea and Tetley brands are constantly being introduced in new markets and these brands had received good response.

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