Tata Coffee Defers Plans On Its Russian Instant Coffee JV

Mumbai, Nov 9: | Updated: Nov 10 2003, 05:30am hrs
Tata Coffee Ltd, an wholly-owned subsidiary of Tata Tea Ltd, has deferred its plan for setting up a joint venture (JV) in Russia. The work for setting up an instant coffee facility near Moscow was slated to start by the beginning of 2004.

Tata Coffee Ltd sources said, The proposed plan for setting up a joint venture in Russia has been put on the back-burner. The Russian partner Grand Trading House is not keen on investing at this point of time. However, Tata Coffee is still pursuing the project.

The initial investment earmarked for the project was around $5 million. As per the memorandum of understanding (MoU), Grand Trading House was supposed to hold 50 per cent while Tata Coffees holding was at 35 per cent and the remaining 15 per cent was held by Kolkata-based Beeyu Overseas, the trading partner of Tata Coffee. The due diligence of the project has already been done by Deloitte Haskins & Touche. As per the agreement, Tata Coffee along with its trading partner was supposed to provide its technological expertise as well as supplying key raw material (coffee beans) from India. The Russian partner was to take the responsibility of marketing and distribution of products in Russia and CIS countries.

At present, Tata Coffee exports nearly 80 per cent of its instant coffee to Russia and the CIS countries. The instant coffee division contributes 50 per cent to the turnover of the company. The company firmed up its plan for setting up a plant in Russia since the local authorities increased the import duty for bulk coffee to promote value addition in the country itself.

Tata Coffee, which is betting big on its instant coffee business, has recently acquired Highhill Coffee India Pvt, which owns an instant coffee facility in Tamil Nadu. With this acquisition, Tata Coffee will have three instant coffee facilities.

Tata Coffee, the largest coffee plantation company in Asia, produces around 10,000 metric tonne of coffee per annum. Besides, it has a total capacity of around 5,000 metric tonne per annum of instant coffee produced by the company as well as through contract manufacturing.