How is Tata Consumer planning to reorganize its business units?

The FMCG franchise of the Tata group, Tata Consumer Products, has been looking to consolidated all its FMCG businesses under one roof for better traction. Accordingly, Tata Consumer Products has just announced a reorganisation plan to unlock synergies by combining the FMCG units of various group companies. To begin with, the plantation business of Tata Coffee will be demerged and added into Tata Consumer Products.

The boards of TCPL and Tata Coffee, in their respective meetings, have already approved this scheme of reorganization. Under the deal, the structure of the stock swap is such that the shareholders of Tata Coffee will receive 1 share of Tata Consumer Products Ltd for every 3 shares held. This transaction is subject to approval by TCPL shareholders and other regulatory approvals, including SEBI and the NCLT, which is the nodal approving authority.

This is the continuation of the attempt to consolidate FMCG businesses for better valuation discovery. It may be recollected that about 3 years back, the cooking salt business of Tata Chemicals (under the banner of Tata Salt) was merged into Tata Global Beverages and the combined entity was renamed as Tata Consumer Products. Salt was a misfit in Tata Chemicals which was focused on specialty chemicals and soda ash.