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Tata to reduce debt of UK acquisition

The Tata group, one of India's largest conglomerates, plans to lower the debt of its British subsidiary, tea firm Tetley Ltd, by a further £25-30 million ($36-43 million) before April 2002, the vice-chairman of Tata Tea said on Wednesday.

Tata Tea, India's largest tea company which acquired Tetley last year, recently injected £10 million into the British company to help it retire high cost debt.

Tata Sons, the holding company of the Tata group, also invested another £20 million.

Tetley currently had a debt burden of around £180 million, R K Krishna Kumar told reporters after a conference called to announce Tata Coffee's acquisition of a stake in coffee bar chain Barista. Tata Coffee is a subsidiary of Tata Tea.

The next round of Tetley's funding will be largely from Tata Tea and not Tata Sons.

"It will not take the form of equity, but I cannot say any more right now. It will happen well before the end of the financial year in March," he said.

Tata Tea acquired Tetley, one of the world's largest companies, for Rs 271 million in February last year.

He said Tetley's debt had to be further reduced before Tata Tea could think of merging the company with itself.

"The merger can only happen when debt levels decrease significantly," he said.

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