Tata Consumer Products Ltd. said it will reorganize its business to bring its overseas operations under the ambit of the flagship company to simplify the structure and unlock synergies.
The company’s composite scheme arrangement includes spinning off the plantation business of Tata Coffee Ltd. and merging it into TCPL Beverages & Foods Limited, a wholly owned subsidiary of Tata Consumer, according to its exchange filing on Tuesday. The remaining extraction and branded coffee business will be merged with Tata Consumer.
The turnover of the spun off business was Rs 375.7 crore in FY21, representing 51% of the total turnover of Tata Coffee.
The merger will enable efficient consolidation of ownership interests in the international branded business owned by Tata Consumer and Tata Coffee, resulting in cost benefits, higher operating and other efficiencies, the statement said.
Once the scheme or arrangements becomes effective:
Shareholders of Tata Coffee (other than Tata Consumer) will receive an aggregate of three equity shares of Tata Consumer for every 10 held in Tata Coffee.
The company plans to issue 1 equity share of Tata Consumer for every 22 of Tata Coffee in consideration of the demerger.
It plans to issue 14 equity shares of Tata Consumer for every 55 held in Tata Coffee in consideration for the merger.
The board of Tata Consumer approved the purchase of 10.15% minority interest in Tata Consumer Products UK Ltd. from Tata Enterprise (Overseas) AG, Switzerland. Tata Consumer will issue 74,59,935 equity shares, equivalent to 0.8% stake, to Tata Enterprise Overseas via preferential issue, subject to shareholder and regulatory approvals.
The restructuring will create a future-ready organization, Sunil D’Souza, managing director and chief executive officer at Tata Consumer, said in the statement. “It will enable us to better leverage our supply chain, create customer focused business verticals, and accelerate decision making & execution. This will be a stepping-stone for further simplification initiatives with a view to achieving recurring operational, administrative and financial synergies.”