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Tata to inject cash, lower Tetley debt

India's Tata group will pump money into Tetley Ltd within three months to reduce debt at the British tea giant it acquired last year, in preparation for creating a "super global company" by merging Tetley with the largest Indian tea producer, an Indian daily said on Thursday.

The Economic Times said that Tata Tea, and Tata Sons, the holding company of the Tata Group, will inject the money to pay off a 20 million pound loan taken out to finance the Tetley acquisition.

Company officials were not immediately available for comment.

The report quoted R K Kumar, chairman of Tetley and vice chairman of Tata Tea.

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

The newspaper report said Kumar indicated Tata Tea and Tetley will be merged in time to "create a 'super global company' with a listing on the New York, London and Bombay stock exchanges."

"The synergies between the two companies are very strong and bringing them together does make sense," it quoted Kumar as saying.

But Kumar added: "This is only at the conceptualisation stage. We aren't working on anything. It may take a while to happen."

Tetley, the inventor of the tea bag, is one of the leading tea companies in the world, with a strong marketing network in 35 countries, the report said.

Tetley is the leading brand of tea bags in the United Kingdom by both sales value and volume, it added.

Tata Tea is also one of the largest tea companies in the world, and the second-largest seller of packet tea in India, the report said.

Tata Tea, which produces a lot of tea in India and neighbouring Sri Lanka, is looking to acquire tea gardens in Africa and at "large-scale sourcing of tea from Bangladesh," it said.

Tata Tea produced 48.74 million kilogrammes of tea in the nine months to December.

Tata Tea's shares were down Rs 0.20 at Rs 216.30 at midday on Thursday. The Bombay Sensex was down 0.52 per cent at that point.

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