Left Menu
Development News Edition

Tata Consumer Products: How Tata Chemicals-TGBL merger will create a market leader

Devdiscourse News Desk | Mumbai | Updated: 15-05-2019 23:08 IST | Created: 15-05-2019 22:10 IST
Tata Consumer Products: How Tata Chemicals-TGBL merger will create a market leader
TGBL will rename itself as Tata Consumer Products after the deal.

With an intent to put in place a consolidated platform for its consumer business and become a leader in the FMCG segment, Tata Group Wednesday announced the transfer of the branded food business from Tata Chemicals to Tata Global Beverages in an all-share deal that will create an over Rs 9,000 crore giant. Under the agreement, Tata Global Beverages (TBGL) will buy the business of selling edible salt, spices, and lentils and give shares in return to Tata Chemicals (TCL).

TGBL will rename itself as Tata Consumer Products after the deal. "The trigger (for merger) is that Indian market is poised for rapid growth and now we have businesses in both the enterprises (TGBL and TCL) which are of scale and size which makes them to bring together. Also, we didn't want to do this till we establish our clear leadership position in both the companies in key categories," TGBL Managing Director Ajoy Misra told reporters during a conference call after the announcement.

"Today, since both the companies have achieved it, we thought this is the right time to come together. Also the vision we have of scale and synergy and that's the outcome of the efforts taken," Misra said. The boards of directors of Tata Global Beverages and Tata Chemicals approved the de-merger of the consumer products business of TCL into TGBL. Also, each shareholder of TCL will get 1.14 new equity shares of TFBL for every one equity share held.

The proposed transaction will create a focused consumer products company with a combined turnover of Rs 9,099 crore and an EBIDTA of Rs 1,154 crore, Misra said. "One of the key objectives of the announcement made is to put in place a consolidated platform to the consumer business of the Tata Group, which is essentially FMCG business," Tata Sons Brand Custodian Harish Bhat said.

A statement issued by the group said that the combination of the two consumer-focused businesses will benefit both sets of shareholders who will be able to participate in a larger business poised to grow their share of the foods and beverages market with a broader exposure to the attractive and fast-growing FMCG sector. TGBL sells tea under Tetley and Tata Tea brands as also coffee under Eight O'Clock brand and bottled water. TCL, the world's third-largest producer of soda ash, will focus on its core chemicals business after this deal.

As per the arrangement, TCL shareholders will retain their ownership of a focused science-led chemistry solutions and speciality products company with a leading portfolio of products in basic and specialty chemicals and strong cash flows to support future growth. Speaking about the deal, TCL Managing Director and CEO R Mukundan said the rationale is to create two platforms with one being becoming a science and chemistry based solution company and the other is being a leader in the consumer product FMCG space.

He further said this combination provides significant benefits to its shareholders by unlocking the value of its consumer products business. When asked whether the company was planning to consolidate its coffee business as well, Misra said, "Tata Coffee, which is a subsidiary of TBGL is more of a B2B

business. It will continue to chart its own journey of growth. We have also made an investment in the greenfield instant coffee facility in Vietnam. So it will continue to be a part of TBGL." Misra further said that in addition to being an Indian consumer brand company, the international brands are very much a part of the TGBL's Indian growth voyage and it will

continue to nurture and invest in those international brands through Tetley and Tata Tea brands, among others. "As we continue to restructure and grow our international business mainly focused on the Indian diaspora, that efforts will continue. TGBL has a great presence in Canada and the UK, among others, the new products will also get access to both markets. This will strengthen our products in India and we will also be exporting," he added.

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

When asked on the prospects of the cement business of Tata Chemicals, Mukundan said, "it (cement business) is a small part of TCL and we have several times looked at it (for divesting). But we have now concluded to run it as a part of our business but the focus market will continue to be in Saurashtra in Gujarat."

(With inputs from agencies.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION / BLOG / INTERVIEW

Tourism post-COVID 19: Lessons learned, out-of-box strategies to ensure the revival

In the pre-COVID 19 period the tourism industry was seen with much hope throughout the world. However, the COVID 19 pandemic has completely paralysed the tourism industry and its dependent sectors. The tourism industry in the post-COVID 19 ...

Cybersecurity post-COVID 19: More internet means more threats, stay alert folks!

When supported by adequate digital awareness campaigns and more crackdowns on cybercrimes, increased internet usage will help more people embrace technology and better understand the risks, bringing us closer to unleashing the true potentia...

Rising temperatures in India seem to counter the spread of COVID 19 infections

Scary predictions on the rate of spread of COVID 19 infections in India are floating in media. But the data on the spread of infections coming so far point to a contrary trajectory putting a question mark on such predictions. Explanations o...

Sanitation post-COVID 19: Tissue paper not in fashion, learn to wash

Tissue paper has failed COVID 19 test. The modern understanding of sanitation is passing through a stage of transformation. Those who used to feel proud of using tissue paper have been compelled to wash frequently their hands with soap. In ...

Videos

Latest News

'The Yogi Bear Show' voice actor Julie Bennett passes away at 88 due to COVID-19

Veteran voice actor Julie Bennett passed away at the age of 88 on Tuesday from health complications caused by COVID-19, reported Fox News. Bennetts talent agent Mark Scroggs confirmed the news of the demise of the actor known as the Cindy B...

Supporting innovation would bring faster economic growth in Asia-Pacific: ADB

Fostering greater innovation would bring faster and more inclusive economic growth in Asia and the Pacific, according to the theme chapter of the Asian Development Outlook ADO 2020 released by the Asian Development Bank ADB today.Developing...

Trump Organisation, hit by virus, tries to delay loan payments: report

US President Donald Trumps family company is asking creditors such as Deutsche Bank if it can delay loan payments as the economic impact of the coronavirus pandemic deepens, The New York Times reported Thursday. The Trump Organization -- th...

Premier Shillong hospital to admit only critically ill non- COVID19 patients from other states

A premier hospital of Shillong has decided that it will admit non-COVID19 cases from other states only if they are critically ill and certified so by the health authorities of the patients states, an official said on Friday. This is part of...

Give Feedback