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Tata Consumer Products Limited will consolidate its business by merging Cos


Tata Group’s Fast Moving Consumer Goods (FMCG) arm, Tata Consumer Products Limited (TCPL), is consolidating its business by merging various companies and plans to reduce the number of legal entities to around 23 from 45 after restructuring, said its Managing Director and CEO, Sunil D’Souza.

This will help TCPL create targeted verticals and unlock potential synergies between them, D’Souza said during a conference call.

Last week, TCPL announced the merger of all Tata Coffee Ltd (TCL) businesses with itself as part of a reorganization plan in line with its strategic priority to unlock synergies and efficiencies.

While TCL’s plantation business will be spun off into TCPL Beverages & Foods Ltd (TBFL), a wholly-owned subsidiary of TCPL, TCL’s remaining business, consisting of its extraction and branded coffee business, will be merged with TCPL. According to D’Souza, the consolidation and simplification aligns the corporate structure with management and administration structures, converges all minority interests of subsidiaries at the TCPL level and into a single listed entity.

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“It creates focused lines of business and unlocks potential synergies…across organizations, as we have 45 legal entities which we are now hopefully collapsing to around 23 to 25 numbers…and because of these cross-shareholdings, we have tax issues, efficiencies, dividend repatriation, and cash traps,” said a transcript of the meeting shared by TCPL with regulators.

“So we’ll be releasing a lot of these coins as we go forward, significant advantages will be in places where we have some businesses that pay taxes versus some that might have tax offsets, there will be efficiency gains, but overall the exercise aims to streamline and structure in terms of piloting multiple elements,” he added.

Pursuant to their plan of merger, TCL shareholders (other than TCPL) will receive a total of 3 equity shares of TCPL for every 10 equity shares they hold in TCL. TCPL will take several steps over the next 12 to 24 months to bring down the structure.

“…after that there is a series of steps to take over the next 12 to 24 months after which we will come to the number of 22, 23 in terms of entities and the reason why we are not fixed on 22, 23 because there are various options to consider as we go along and choices to make where we will ultimately land, but that said after that there is still room for simplification beyond that,” D’Souza said.

However, he also added that the goal will be to keep looking at options to keep looking for efficiencies and reduce the number of legal entities as long as there are tangible benefits on the table in terms of band. managerial bandwidth or profitability, he added.

After merging the consumer products business of Tata Chemicals with Tata Global Beverages, the company was renamed TCPL and now owns brands such as TATA Salt, TATA Tea, Tetley, Eight O’clock, Himalayan Water, Tata Water Plus and Tata Gluco Plus. Its food portfolio includes brands such as Tata Salt, Tata Sampann, Tata Soulfull and Tata Q.

The Tata Group company aspires to be a formidable player in the FMCG category, expanding its game in the existing category and venturing into new areas. TCPL has a reach of over 200 million households and has an annual revenue of Rs 11,600 crore with operations in India and international markets.


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