TGBL to fo­cus on scal­ing up op­er­a­tions

The Hindu Business Line - - NEWS - DEBASISH BHADURI

Tata Global Bev­er­ages Ltd (TGBL) is look­ing at con­sol­i­dat­ing busi­nesses which are “mar­ginal”, and at ex­it­ing non-core for­eign mar­kets which lack scale of op­er­a­tions.

Ac­cord­ing to Tata Group Chair­man, N Chan­drasekaran, the com­pany will look to ex­pand where it can achieve a cer­tain scale of op­er­a­tions and build a “high-class con­sumer prod­uct com­pany”.

“The com­pany has a num­ber of sub­sidiaries and is present in var­i­ous mar­kets. Some mar­kets we will look to exit, and some sub­sidiaries we may con­sol­i­date. We will be in ar­eas where we can scale up,” Chan­drasekaran said dur­ing the an­nual gen­eral meet­ing of TGBL here on Tues­day.

As part of the on­go­ing ef­fort to sim­plify its or­gan­i­sa­tional struc­ture, The Tata Group had re­cently N Chan­drasekaran, Chair­man, Tata Group

an­nounced its de­ci­sion to merge the con­sumer busi­nesses of the two listed en­ti­ties — TGBL and Tata Chem­i­cals Ltd. Tata Chem­i­cals will trans­fer its con­sumer foods di­vi­sion to TGBL and the merged en­tity will be re­named Tata Con­sumer Prod­ucts.

The merger will help TGBL scale up its port­fo­lio, he said.

TGBL had wit­nessed poor growth due to a “mar­ginal pres­ence” in many in­ter­na­tional mar­kets, and con­sol­i­dated op­er­a­tions by ex­it­ing China and Sri Lanka and re­strict­ing op­er­a­tions in Rus­sia in 2017.

The com­pany has also re­struc­tured its EMEA (UK, Europe, the Mid­dle East and Africa) and CAA (Canada, Aus­tralia and Amer­ica) busi­nesses un­der a sin­gle­op­er­at­ing unit, it said in its lat­est an­nual re­port.

“Nearly 40 per cent of the to­tal rev­enue comes from the in­ter­na­tional mar­kets. There has hardly been any growth in these mar­kets. We need to keep the growth mo­men­tum,” Chan­drasekaran said.

Un­less TGBL is able to fo­cus on the do­mes­tic mar­ket and im­prove its op­er­a­tions, its earn­ings may fall short of ‘ac­cept­able lev­els’, he added.

Ac­cord­ing to Chan­drasekaran, the stag­na­tion of growth in in­ter­na­tional mar­kets, achiev­ing scale of op­er­a­tions and im­prov­ing fi­nan­cial ma­trix are three key chal­lenges con­fronting the com­pany at present. A ma­jor­ity of these, how­ever, could be ad­dressed by the merger of Tata Chem­i­cals and TGBL, likely to ma­te­ri­alise in 12-18 months.

The Group Chair­man also high­lighted the need for hav­ing a well-di­ver­si­fied port­fo­lio.

“In the FMCG seg­ment, we need a large port­fo­lio. We can­not just be a sin­gle tea player and de­pend on it to at­tain scale. Tea, wa­ter...these things are good but they are not go­ing to give scale. The com­pany has to gain scale by a wide range of prod­ucts,” he said.

While the merger will ini­tially fo­cus on food and bev­er­ages, it will also ex­plore di­ver­si­fi­ca­tion.

Re­spond­ing to a share­holder’s query on the possibilit­y of rolling out spe­cialty restau­rants un­der TGBL, he said the In­dian Ho­tels Com­pany is con­sid­er­ing the pro­posal.

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