TGBL may rejig arms, exit small biz

Tata Group will continue to restructure Tata Global Beverages (TGBL) in order to make it a complete diversified consumer product company. The chairman of the group, N Chandrasekaran, on Tuesday pointed out that it is looking at TGBL’s consolidation by reducing the number of subsidiaries, exiting small markets and businesses in future and focussing more on the domestic market and select overseas ones. The company has already sold out its operations in China and Russia.

Similarly, it is looking at adding some more product segments like spices and detergent to TGBL portfolio in order to optimise shareholders’ value. “We need to focus in India and select overseas markets. We are looking at each part of the country more carefully and a lot of work has happened in this regard. We want to project TGBL not as a food product outfit but as a consumer product company. In the FMCG segment, we need a large portfolio. We cannot just be a single tea player and depend on it to attain scale. The company has to gain scale through a wide range of products,” Chandrasekaran said in his address to TGBL shareholders at the AGM here.

TGBL is likely to be renamed as Tata Consumer Products after the restructuring, which will see its turnover “rise 25%”.

A few weeks back, the group had merged consumer businesses of Tata Chemicals with TGBL. Chandrasekaran said he expects the completion of the proposed transfer of Tata Chemical’s consumer business to TGBL to take place in the next 12-18 months. “I would be happy if it happens in the next 12 months," he said.

Following the transfer, TGBL will have branded edible salt, pulses and spices in its product portfolio. “The pilot for (an entry to) detergent (market) has already started.”

The Tata Group chairman also indicated that Indian Hotels Co (IHCL) may venture into a standalone restaurant business. When TOI asked about the timing of the standalone restaurant venture, he said, “Indian Hotels will take a call at an appropriate time.”

Replying to another query, Chandrasekaran said: “Tata Coffee will not be merged with TGBL for now. However, Tata Cha, the out-of-home beverage space of the group, may spread its wings beyond Bengaluru as the company will evaluate the prospect.”

The company will have to “pay attention to improve its financial performance in terms of return ratio", he said, adding that the amount of capital deployed in the company has been quite significant. “We need to move up the value chain and enter high-value segments... build a high-class, premium consumer products company by leveraging the large consumer base in India. That is the goal that we are working towards,” he said.

Chandrasekaran said the company’s “branded tea performance has been very good" which essentially means that the company "needs to be moving up the value-added products in terms of new launches in order to meaningfully grow in the tea segment.

TGBL has recently entered into a non-binding term sheet to acquire the branded tea business (Lalghoda and Kalaghoda) brands of Dhunseri Tea, for an aggregate consideration of up to Rs 101 crore.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/tgbl-may-rejig-arms-exit-small-biz/69764950