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Tata Coffee to set up plant in Uganda with Tata Africa

Business Standard - March 7, 2006
Tata Coffee will partner with Tata Africa and a financial institution for its coffee plant venture in Uganda. The company is planning a 3,600 tonne coffee plant in Uganda. Tata Coffee Managing Director M H Ashraff said the three entities would have an equal share in the joint venture. A senior Tata Coffee team would be visiting Uganda to hold discussions with the government there on the project. Ashraff said the project should be able to go on stream in one year. In the home market, Tata Coffee's freeze dried coffee plant was expected to start production in September-October.

The capacity of the freeze dried plant at Madurai would be around 2,000 tonne. Ashraff said the plant would be a 100 per cent export-oriented unit and would service high-end markets in Europe and Russia. The move would mark Tata Coffee's foray into the European markets, as the company is at present mainly focused on Russia and CIS countries. The company's combined investment in the two ventures is pegged at Rs 125 crore. Tata Coffee recently announced that its board would meet to raise funds through a rights issue.

Ashraff said the details of how much of the investment would be funded through the rights issue have not yet been worked out, adding that the board is yet to approve the rights issue proposal. However, Tata Coffee has no plans for making any further investment in the plantations business. Last year, the company acquired six estates, inclusive of net current assets, in south India from Tata Tea for Rs 55 crore. Ahsraff said Tata Coffee is a plantation company and with the expertise it would remain so, "having multi-cropping acts as a hedge".

Tata Coffee's stance is different from that of its parent company Tata Tea, which is in the process of exiting the plantations business. The company divested its holding in its south India plantations operations and is currently drawing up a strategy for the north India plantations.