KOLKATA: Tata Tea on Tuesday signed a joint venture agreement with Zhejiang Tea Import & Export (ZTIE), China's largest green tea exporter. ZTIE is mainly state-owned. Tata Tea will hold 70 per cent stake in the new company. Speaking at the signing ceremony, Tata Tea Managing Director, Percy Siganporia, said the project was of strategic importance for the Tata group in reaching out to the Chinese and Far Eastern markets.

An official spokesperson of Tata Tea said the agreement involved setting up of a joint venture company in the Economic Development Zone of Anji County, Zhejiang, China, for manufacture and marketing of green tea polyphenols, other green tea extracts, cold and hot water soluble instant tea, liquid tea concentrates and other value-added beverage products.

The project will entail an initial investment of $16 million, which will be funded through debt and equity.

A team of Tata Tea officials led by its Managing Director, Chairman of ZTIE and its holding company, and senior State officials attended the signing ceremony, which took place at the Government House, Anji County.

Tata Tea has been involved in the tea extract business for nearly 40 years with its South India factory manufacturing black tea extract exclusively for exports.

As part of its plans to expand the tea extract business and to have a presence in the global tea market, the group has focused on green tea extracts which are gaining popularity for application in food, beverages, personal care products and food supplements. Tata Tea Inc., a Tata Tea subsidiary in the U.S., is involved in marketing and value-addition of tea extracts.

ZTIE is based in Hangzhou in Zhejiang province, one of China's largest tea-growing areas.

The company has an established marketing network in China, Japan, Pakistan, Morocco and other parts of Africa. While the State-owned Xinghe group holds 54 per cent of the equity, employees and managers hold the balance. The company's turnover in 2006 was $450 million.

With its thrust on globalisation, Tata Tea has been on an acquisition spree ever since it got the Tetley Group in 2000. The combined entity of Tata Tea and Tetley now represents the world's second-largest branded tea operation with product presence in over 40 countries.

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