"We looking at options to set up an additional plant for instant tea as the supply is not keeping with the increasing demand," Tata Tea senior vice-president Percy Siganporia said.

The setting up of the additional plant was part of the Tata group's investment plans. "We are looking for the right place to set up the plant. It will depend on the raw material availability," he said.

However, the plans, including amount to be invested, had not been finalised, Siganporia, who was here in connection with the launch of "Agni" brand tea, said, adding it would help the company enhance its instant tea capacity from the current three million kg.

Tata Tea sources said the company was likely to increase instant tea exports this year by 40 per cent to 3 million kg. The plan for theadditional instant tea plant was in view of large growth in markets for the beverage in the US, Europe and Japan, they said.

Tata Tea, the largest instant Tea exporter from India, has a subsidiary in the US to market the instant version. Instant tea, which requires dilution of black tea, has found itself as an alternative to soft drinks, though it is yet to catch up in India.

The sources said the new plant would, however, come up outside Munnar in Kerala, where Tata Tea currently has a state-of-the-art instant tea factory.

Asked about plans for diverisification, the sources said the company did not have any plan other than acquisition of tea estates abroad.

When contacted, Tata Tea executive director MH Ashraff said the company was planning to buy Tea estates in Uganda and Tanzania.

On the company's efforts to buy estates in Kenya, he said it had not yielded results. "No one is willing to sell their estates in Kenya," he said.

Tata Tea already has 49 per cent stake in Watawala Tea Estate in SriLanka. About 10 million kg of tea is produced in the estate.

Meanwhile, sources said Tata Tea was planning to increase its turnover this financial year to Rs 980 crore from Rs 900 crore last year.

The company's tea harvest from its estates was likely to around 64 million kg, the same as last year, in view of a fall in harvest in its southern plantation division.

Last year, the record harvest by the company was aided by a 33.2 million kg production by the southern division but this year the northern division was expected to do better, they added.