Tata Chemicals (TCL) said it will transfer its consumer products business to Tata Global Beverages (TGBL), according to a May 15 release filed with the exchanges.
The release also noted that TGBL will be renamed as Tata Consumer Products Limited, and expects the combined entity to reach over 200 million households.
“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 twelve months period ended March 31, 2019 on a proforma basis,” said the release.
According to the scheme, each shareholder of TCL will get 1.14 new equity shares of TGBL for every 1 equity share held in TCL, meaning that a shareholder holding 100 shares in TCL will receive 114 shares in TGBL.
The company cited revenue benefits and cost synergies, supply chain opportunities, operational improvements, and the alignment of its logistics infrastructure as the rationale for the transfer. The transfer also aimed at leveraging distribution networks and bringing about economies of scale.
“The scheme enhances the financial profile with higher growth, margin expansion and increased cash flows that will provide further headroom for inorganic growth opportunities in India and abroad,” it said.
The release also noted that the Tata Chemicals’ consumer products business includes the sourcing, packaging, marketing, distribution and sales of vacuum evaporated edible common salt for human consumption, spices, protein foods and other foods and products. The transfer is also expected to combine key brands such as Tata Salt, Tata Tea, Tata Sampann and Tetley under a single umbrella.