Tata to merge consumer unit with Tata Global Beverages

Our Bureau Mumbai | Updated on May 15, 2019 Published on May 15, 2019

The first such transaction between two listed Tata companies underpins group Chairman Natarajan Chandrasekaran’s resolve to simplify the coffee-to-cars conglomerate. File photo

As part of the ongoing effort to simplify its organisational structure, Tata Group has decided to merge the consumer businesses of its two listed entities — Tata Global Beverages Limited (TGBL) and Tata Chemicals Limited (TCL).

With this, TCL’s consumer business, which comprises the Tata Salt brand and other packaged foods, will now be a part of the new entity called Tata Consumer Products Limited.

TCL will continue to operate its scientific research and chemicals business under the leadership of its CEO, R Mukandan, while TGBL’s CEO and MD Ajoy Misra will lead the new entity.

About 300 employees from TCL will join TGBL, the owner of brands such as Tetley and Tata Coffee.

The new entity has been formed post the demerger of TCL’s consumer products business into TGBL through a National Company Law Tribunal (NCLT)-approved scheme, following which each shareholder of TCL will get 1.14 new shares of TGBL for each share held in TCL.

‘Under one roof’

At a conference call here, Harish Bhat, Brand Custodian of Tata Sons, said that the objective of this merger was to bring all the consumer brands under one roof, in order to create a strong consumer products company in the ₹5-lakh crore Indian FMCG market, which has giants such as Hindustan Unilever, ITC, and Godrej.

With the new consumer entity in place, Tata Group plans to strengthen its product pipeline and reach out to over 20 crore households in India through a stronger supply chain and distribution network.

In addition, the new consumer entity expects to achieve substantial revenue and cost synergies, which will add value to its shareholders. “The new entity will have a combined turnover of ₹9,099 crore and an EBITDA of ₹1,154 crore. It is expected to be EPS accretive from the go,” Bhat said.

New launches

Bhat also hinted that going forward, the new entity will work towards creating new categories and adding new product lines.

The company is already planning to launch a detergent brand soon.

“Tata Consumer Products consolidates our current presence in the food and beverages segment of the fast-growing consumer sector. Through this combination, we have created a strong growth platform to meet the growing aspirations of the Indian consumers,” said N Chandrasekaran, Chairman, Tata Sons.

Chandrasekharan, who took charge of the $103-billion company in 2017, has also consolidated the defence and aerospace business into Tata Aerospace and Defence.

Similar restructuring has also been done in the real estate space.

The transaction is expected to be completed by the fourth quarter of FY20, or the first quarter of FY21.



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Published on May 15, 2019
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