Mumbai: In a major streamlining of its businesses, Tata Sons today transferred its consumer products businesses from Tata Chemicals Ltd (TCL) to Tata Global Beverages Ltd (TGBL).
“The Boards of Directors of Tata Global Beverages Limited (TGBL) and Tata Chemicals Limited (TCL), at their respective meetings held today, have approved the de-merger of the consumer products business of TCL into TGBL through a National Company Law Tribunal approved scheme of arrangement,” the companies said in a filing on the BSE.
Pursuant to the scheme, each shareholder of TCL will be 1.14 new equity shares of TGBL for every 1 equity share held in TCL. This means a shareholder holding 100 shares in TCL will receive 114 shares in TGBL.
The respective Boards have approved the entitlement ratio based on the recommendations of independent valuers, the press statement added.
Tata Global Beverages will be renamed Tata Consumer Products.
N Chandrasekaran, chairman of Tata Sons, said: “Tata Consumer Products consolidates our current presence in food and beverages in the fast-growing consumer sector. Through this combination, we have created a strong growth platform to meet the growing aspirations of Indian consumers.”
Tata Global Beverages closed 1% lower to ₹198.50 on BSE while Tata Chemicals lost 3% to ₹557. So far this year, Tata Chemicals shares are down 21.2% while Tata Global 9.2%.
The proposed transaction will create a focused consumer products company with a combined turnover and operating profit of ₹9,099 crore and ₹1,154 crore respectively, for the twelve months period ended March 31, 2019, on a proforma basis.
“The combination of the two consumer-focused businesses will benefit both sets of shareholders who will be able to participate in a larger business poised to grow their share of the foods and beverages market with a broader exposure to the attractive and fast-growing FMCG sector,” the company said, adding that Tata Chemicals shareholders will retain their ownership of a focused science-led chemistry solutions and specialty products company with a leading portfolio of products in basic and specialty chemicals and strong cash flows to support future growth.
The combined consumer business will also benefit from a combined reach of over 200 million households, a broader portfolio to deepen distribution, enhanced innovation.
The annual turnover of the Tata Chemcials’ demerged division is ₹1,847 crore, representing 16% of the total turnover of the demerged company on a consolidated basis.
The transaction is subject to the necessary statutory and regulatory approvals including approvals of the respective benches of NCLT, the Stock Exchanges, Sebi and the respective shareholders and lenders/creditors of each of the companies. The transaction is expected to be completed by the end of this fiscal.