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Tata group to invest £30 million in Tetley

The Tata group will invest £30 million in Tetley Ltd, a subsidiary of Tata Tea, to help it retire high-cost debt, a senior company official said on Thursday.

Tata Tea, India's largest tea producer, is part of the diversified Tata group, the country's second-largest business group. Tetley, the inventor of the tea bag, is one of the leading tea companies in the world, with a marketing network in 35 countries.

"This takes forward our plan to integrate the operations of the two companies and shows our commitment to the acquisition," Tata Tea's managing director Homi Khusrokhan said.

He added that Tetley's debt of around £170 million would be repaid in the next three to four years.

The proposed £30 million investment will increase the equity capital of Tetley to £100 million, the Business Standard reported on Thursday.

Tata Sons, the holding company of the Tata group, will invest £20 million and Tata Tea will contribute £10 million to increase Tetley's equity capital, the daily said.

The action will reduce Tata Tea's stake in Tetley to 80 per cent from 100 per cent, it said. Khusrokhan said that the Tata group is preparing to create a "super global company" by merging Tetley with Tata Tea but did not expect the merger to be formalised immediately.

Tata Tea acquired Tetley for £271 million in February last year, but said it would not attempt to merge the companies until debt had been reduced to a manageable level.

Shares of Tata Tea were trading 1.4 per cent higher at Rs 207 in early Thursday trade at the Bombay Stock Exchange.

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