Tata Tea

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The project is to enable the setting up of North East India Plantation Company (NEPC or the Company) to acquire and manage the North East India tea plantations currently owned by Tata Tea Limited (TTL) and implement a sustainable “worker-shareholder” model, in which the management and employees would have a significant shareholding. TTL is the third largest player in the global tea market with a consolidated turnover of $700 million and a presence in over 40 countries. TTL’s operations span the entire value-chain in the tea business including tea cultivation, production, distribution and marketing of branded teas. TTL’s strategy is to become a global beverage Company with a focus on branded tea operations. The ownership and management of tea plantations do not fit into this overall strategy. Despite keen interest from investors to buy its plantations outright, TTL is pursuing an employee-owned business model to improve the efficiency and ensure the long-term sustainability of plantation operations. Towards this end, TTL has started to separate its tea plantations in South and North East India as stand-alone companies. In April 2005, TTL de-merged 17 tea plantations in South India into a separate Company – Kanan Devan Hills Plantations Company Private Limited (KDHP), with a majority shareholding being transferred to KDHP’s 13,000 employees. TTL continues to own 19% of KDHP and plays a key role on the board, in providing healthcare services through another Tata Group subsidiary and in providing continuous assistance to KDHP in other areas. TTL now plans to de-merge its tea plantations in North East India into a new Company, NEPC. TTL’s existing North India Plantation Operations (NIPO) comprise 24 tea plantations located in the states of Assam and West Bengal, encompassing a total area of approximately 24,000 hectares (ha). The business model is centered on deriving greater land and labor productivity through more efficient cultivation, improved capacity utilization of processing operations, alternative crop cultivation and exploiting the tourism potential in the locations. Through the South Asia Enterprise Development Facility (SEDF), IFC is already providing technical assistance to TTL to facilitate the introduction of alternative crops in its plantations in Assam.