Chemical product strategy
Tata Chemicals will aggressively grow its Specialty Chemistry business in the areas of Agro-Science, Nutrition Science, Material Science, and Energy Storage Science.
Underlining the business strategy, Tata Chemicals Managing Director and CEO R. Mukundan said: “In addition, the Basic Chemistry Business of Tata Chemicals will be the Global Partner of Choice for Soda Ash, Salt, and Bicarbonate to leading brands of Food, Pharma, Detergents and Glass.”
The strategy was presented after the board of Tata Global Beverages Limited (TGBL) and Tata Chemicals Limited (TCL), at their respective meetings held on 15 May 2019, have approved the de-merger of the Consumer Products Business of TCL into TGBL through a National Company Law Tribunal (NCLT) approved scheme of arrangement.
“This combination provides significant benefits to our shareholders by unlocking the value of our Consumer Products Business,” said Mukundan.
Commenting on the demerger, Tata Sons Chairman N Chandrasekaran pointed out: “Tata Consumer Products consolidates our current presence in food & 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.”
TGBL Managing Director & CEO Ajoy Misra added: “This transaction is consistent with our strategy to deepen our India presence and transform into a broader FMCG player.
“Existing TGBL shareholders will benefit significantly as the Consumer Products Business increases our exposure to high growth product categories and provides a strong platform to seize new opportunities in this sector. We will also continue to nurture and grow our global brands.”
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 31 March 2019 on a proforma basis, said Tata in a release on 15 May 2019.
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 & beverages market with a broader exposure to the attractive and fast-growing FMCG sector.
TCL 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 capabilities, as well as a strong product pipeline.
In addition, the new consumer entity expects to achieve substantial revenue and cost synergies which will add value to its shareholders.
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 Q4 FY20 / Q1 FY21. fiinews.com
