India's steel-to-autos conglomerate Tata Group announced on Wednesday that it is demerging the consumer products business of Tata Chemicals into Tata Global Beverages in order to achieve broader exposure to the fast-moving consumer goods sector.
In a stock market disclosure, the company said that Tata Global Beverages will be renamed as Tata Consumer Products Ltd after the demerger.
The proposed transaction will create a focused consumer products company with a combined turnover and EBITDA of Rs 9,099 crore and Rs 1,154 crore, respectively, for the period ended 31 March 2019 on a pro forma basis.
The shareholders of Tata Chemicals will get 1.14 new shares of Tata Global per share they hold, the filing stated.
“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,” said N Chandrasekaran, chairman at Tata Sons.
The company is hopeful that the combined consumer business will also benefit from the reach of over 20 crore households.
The demerged entity will now have key brands such as Tata Salt, Tata Tea, Tata Sampann and Tetley under a single umbrella. Post the transaction, Tata Chemicals will focus on innovative science-based chemistry solutions and products.
Known to be the world's second largest tea company, Tata Global Beverages is present in over 40 countries. It employs around 3,000 people across the world.
Tata Chemicals had last year sold its phosphatic fertilisers business to a step-down unit of Singapore’s Indorama Corporation.
The company’s speciality chemical portfolio includes the sodium bicarbonate business, agrochemicals through its subsidiary Rallis India, and planned investments in new projects for nutraceuticals and highly dispersible silica.