Tata Global Beverages Ltd. (TGBL) chairman N. Chandrasekaran said the proposed demerger of the consumer products business of Tata Chemicals Ltd. into TGBL was to build a premium, high-class consumer products company.
Speaking at the annual general meeting of TGBL, he said the merger announcement was aimed at creating a broader consumer products company that would kick-start growth.
“We need to kick start the growth momentum,” he said. The core challenge ahead of the company was in leveraging its strong assets, including brands.
“We also need to scale up and create a large portfolio. Tea, water cannot give scale,” he said.
‘Larger canvas’
“TGBL’s financial metrics were not adequate. We need to address this,” he said. It would not be a mere food products company and the canvas might be larger, he added.
Later, responding to shareholders queries, he said that TGBL would not like to be in any marginal business. “We want to select particular opportunities and scale them up,” he said. “TGBL’s performance has been muted for years, profit has been stagnant,” he said.
He indicated that the company might take a re-look at the number of its subsidiaries and may consolidate, if need be. “We will be in areas where we can scale up,” Mr. Chandrasekaran said. TGBL managing director and CEO Ajoy Misra said the company had seen improved topline from its India business, but profits had been impacted in FY19 due to rising costs and the Kerala floods.
In international business, Tetley’s cold infusion launch is now the “hottest news”. However, most of the businesses were small in scale, he said. The water business had seen degrowth with distribution losses, he said.
On the potential acquisition of Dhunseri’s tea brands in Rajasthan, he said that due diligence was on and it would enable significant penetration into the large, but fragmented tea consumption market in Rajasthan.
57% share
Commenting on the move to bring TGBL and the consumer products business of TCL on a single platform, he said that tea would contribute to 57% share of the business, followed by 18% of salt, 13% coffee and 12% of others.
Mr. Chandrasekaran said that while the probability of including the detergents business was now being piloted, spices and pulses would be retailed under the Sampann brand.