Tata Consumer Products (TCPL), a Mumbai-based fast-moving consumer goods (FMCG) conglomerate, announced a reorganization of its divisions on Tuesday, with the goal of bringing its international operations under the umbrella of the flagship company. Tata Coffee Limited (TCLplantation )’s business will be demerged into TCPL Beverages & Foods Limited (TBFL), a wholly-owned subsidiary of TCPL. In addition, TCL’s remaining business, which includes extraction and branded coffee, will be merged with TCPL.
While the demerger is the first phase, the immediate second step is the merger of TCL’s surviving businesses. Both moves have been considered as part of a composite arrangement proposal. Apart from that, TCPL plans to buy a minority stake in its UK subsidiary, Tata Consumer Products UK Limited (TCP UK), through a share swap and a preferential issue of its equity shares.
“These initiatives will help TCPL achieve its goal of being a future-ready organization by serving as a stepping stone to greater simplification.” Operational efficiency, faster decision-making and execution, the formation of targeted business verticals, and the unleashing of potential synergies will all arise from these efforts. Following the completion of the proposed transactions and future simplification initiatives, which will be undertaken following the receipt of requisite approvals and processes, the consolidated actions outlined here are expected to generate material revenue, cost, and other synergies over the medium to long term,” the company management said.
TCL stockholders (other than TCPL) will receive an aggregate of three TCPL equity shares for every ten TCL equity shares they own. To make this work, the company’s management intends to issue one TCPL equity share for every 22 TCL equity shares in exchange for the demerger (as per the approved share entitlement ratio). In addition, in exchange for the transaction, TCL will get 14 TCPL equity shares for every 55 TCL equity shares.
“Through this deal, TCL stockholders will gain access to several growth engines as well as a stake in a larger and rapidly rising FMCG company.” Better synergies and business efficiency are expected to benefit TCPL shareholders in the future,” it stated.
“The reorganization is in keeping with Tata Consumer Products’ strategic aims, which are to uncover synergies and build a future-ready organization.” We’ll be able to better leverage our supply chain, build customer-focused business verticals, and speed up decision-making and execution as a result of this process. This will serve as a springboard for future simplification efforts aimed at delivering recurrent operational, administrative, and financial efficiencies, according to Sunil D’Souza, TCPL’s MD and CEO.