Kolkata: Tata Tea (GB), the special purpose vehicle (SPV) formed for the acquisition of The Tetley Group Ltd (TTGL), has declared its first dividend.

The interim dividend is based on the operating performance of TTGL and translates to Rs 30 crore approximately. Accordingly, on Tata Tea’s direct 84.50 shareholding in Tata Tea (GB), Tata Tea would receive a dividend of Rs 25.35 crore approximately.

In addition, Tata Tea Inc, US, a wholly owned subsidiary of Tata Tea, which is also a shareholder of Tata Tea (GB) would receive a dividend of Rs 4.20 crore.

Homi R Khusrokhan, managing director Tata Tea said this was the maiden dividend from Tata Tea (GB) and attributed it to the good performance of the company. Khusrokhan added that the debt refinancing and rationalisation of cost has resulted in sufficient headroom for distribution of profits.

TTGL, which posted operating profits this year, is looking at recording net profit next year. The group has recast its debts incurred at the time of acquiring TTGL.

The entire debt of 171 million pounds has been fully paid and replaced by a fresh cost effective debt, which was to the tune of 174 million pounds. This would result in savings of 6 million pounds per annum in interest. It may be recalled that at the time of the acquisition of TTGL in March 2000, the financing was highly leveraged with the debt equity of Tata Tea (GB) being 3:1.

Over the last three years, the company has worked down the debt, which has helped reduce Tata Tea (GB’s) debt equity to 1.7:1.

The management expects the leveraged debt structure to be progressively worked down and for the company to be in a position to siwtch over to a traditional coporate debt structure in the near future.