Tata Chemicals To Transfer Consumer Business To Tata Global

The Tata Group will bring its consumer businesses under one unit as the salt-to-software conglomerate continues with restructuring to streamline its operations. Tata Chemicals Ltd. will transfer its food business to Tata Global Beverages Ltd., one of the biggest makers of branded tea and the owner of Tetley, the company said in an exchange filing.

According to the share swap ratio set for the deal, shareholders will get 114 shares of Tata Global for every 100 held in Tata Chemicals. And Tata Global will be renamed Tata Consumer Products Ltd. The deal values Tata Chemicals’ consumer business at nearly Rs 5,800 crore, according to BloombergQuint’s calculation. The transaction, subject to necessary approvals, will be completed by June 2020.

This is the third such consolidation after Natarajan Chandrasekaran took over as chairman of Tata Sons Ltd. in February 2017. The group has since sold its consumer telecom business to Bharti Airtel Ltd. and merged defence arms under Tata Aerospace and Defence Ltd. The conglomerate has more than 100 companies but the bulk of the contribution to revenue and profits comes from Tata Consultancy Services Ltd.

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

A majority of Tata Global’s revenue comes from the U.K. and U.S. from its coffee and Tetley Tea businesses and a deal like this would further strengthen the company’s balance sheet, according to ICICI Direct’s Research Analyst Sanjay Manyal. “Concerns remain that both the categories—tea and salt—are saturated and aren't growing very fast.” The combination of the tea and salt businesses will enable more media spends and investment in creating new categories, Manyal said.

Consumer Business With Rs 9,000-Crore Revenue

Tata Chemicals’ consumer business that will be transferred to Tata Global includes sourcing, packaging, marketing, distribution and sales of its Tata Salt, pulses and spices under the Sampann brand, and its snacks business. The revenue and operating income of the combined consumer unit for the year ended March 2019 stood at Rs 9,099 crore and Rs 1,154 crore, on a proforma basis, the company said.