Tata Global seeks new captain to power its FMCG ambitions

The Tata Group has shortlisted a few candidates to become the new chief executive of its beverages company Tata Global Beverages (TGBL) to help build a scalable FMCG business in India, people familiar with the development said.

Senior Unilever executives Sanjiv Kakkar, JV Raman and Hemant Bakshi and the CEO of a leading Indian foods company are among those being shortlisted for the job. Current CEO Ajoy Misra will handhold the new hire until his one-year term ends in March 2020, they said.

TGBL declined to comment on the CEO hiring. “We will make the necessary announcements at the appropriate time,” a spokesperson said.

Tata Sons chairman N Chandrasekaran had acknowledged at TGBL's AGM recently that the company's financial metrics were inadequate, and that tea and water businesses cannot provide the required scale to grow the maker of Tata Tea, Tetley, Eight O’Clock coffee and Himalayan mineral water brands.

The Kolkata-based company has transformed from a plantations company to a branded beverages company and will soon change into a foods company due to the proposed transfer of the consumer products business of Tata Chemicals. TGBL will be renamed Tata Consumer Products after completion of the transfer of the salt, spices and pulses businesses.

“The company wants to ensure the CEO has the right experience to build global brands,” said an official close to the development.

Former Unilever director Harish Manwani is an independent member on the board of Tata Sons.

TGBL reported consolidated revenues of Rs 7,251 crore for FY19 with a net profit of Rs 408 crore. The company’s topline and bottomline have largely remained flat in recent years. Raw material burden on revenues has been rising steadily. Its international business has been a drag on its performance. The coffee business in the US is sluggish and the black tea market in the UK has been declining. The company has been exiting non-performing international operations in Russia, Sri Lanka and China.

For a FMCG company, TGBL has very low return on capital employed and return on net worth at 9.3% at 6.6%, respectively, for fiscal 2019. Typically, foods businesses need a 10-15 year plan to scale it up and build a presence in the country.

Top officials close to the development said internally there is no business clarity yet among TGBL executives about the plan to grow the pulses portfolio acquired from Tata Chemicals. The FMCG business would require a massive overhaul to stay relevant and competitive, they said.

“The back-end of TGBL, such as supply chain, product development and warehousing, is lagging behind compared to competitors,” one of the sources said. Also, the company would need to scale up its core tea, coffee and water businesses to support the acquisition of the pulses business from Tata Chemicals, the sources said.

A TGBL spokesperson said the company would absorb Tata Chemicals’ consumer products division and its food science technology team at the innovation centre, which will continue to work on the food business. “The combined business reach (Including food business) will be 200 million households,” he said. “We have a strong sales and distribution network in place and clear plans to strengthen and scale it up further. A digitally enabled sales, distribution and supply chain transformation initiative is well underway to further enhance reach and improve channel efficiency.”

TGBL has a complex structure with 39 subsidiaries. The management has been restructuring its operations, and consolidation of arms is one of the agendas, company insiders said. However, the merger of Tata Coffee, a listed subsidiary, with TGBL has been ruled out for now, they said.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/personal-care-pet-supplies-liquor/tata-global-seeks-new-captain-to-power-its-fmcg-ambitions/69967120