Tata group’s merger of consumer products biz is a masterstroke.

It has been 15 months since the Tata group announced a restructuring of its consumer products business under the umbrella of Tata Consumer Products Ltd.

Tata group had decided then to demerge consumer business of Tata Chemicals and merge it with Tata Global Beverages. This new entity was to be called Tata Consumer Products.

Tata Consumer Products Share Price - Past 1 year 

(Source : www.nseindia.com)

In absolute terms, the market capitalization of Tata Chemicals Ltd and Tata Global Beverages stood at around  Rs.27,000 crores ahead of the restructuring.

Tata Consumer Products - the merged entity valuation is now - Rs.47000 crores.

The Tata group is clearly focused on leveraging its brand and participating in India’s consumption story. For this Tata Group brought in a new CEO and MD – Mr. Sunil D'Souza.

Mr. D’Souza took over the reins of Tata Consumer Products (TCP) as MD & CEO from Apr’20. Previously, he has served as the MD of Whirlpool India Limited. 

Mr. D’Souza has worked with PepsiCo Inc. for 15 years – his last assignment was as General Manager of the VIMAPS region, Malaysia. He has also worked with Coca Cola, Standard Chartered Bank and Brooke Bond Lipton India (now HUL) in various capacities. 

Under Mr. D Souza's leadership he company is in the process of clearly defining acquisition opportunities. Due to the COVID-19 crisis, many acquisition opportunities are likely to come up; however, TCP plans to remain selective.

As an example, Mr. D’Souza cites TCP’s acquisition in FY20 of Dhunseri Tea for INR1b (houses brands like Lal Ghoda and Kala Ghoda) – a prominent player in Rajasthan. With this acquisition, TCP could enter into the Rajasthan market with its own product, which was not the case earlier.

The strategy is clear.

Currently the company has two strong legs in the India Business - Tata Tea and Tata Salt - wherein TCP is targeting double digit growth, driven by cross-selling between Tata Chemicals and TCP's distribution channel. 

TCP is building a third leg of growth Tata Sampann - which houses pulses and spices, a segment which is largely fragmented in India and hence offers vast opportunities for growth. 

Hopefully all this will create more value for shareholders. Lets wait and watch. 

Disclaimer : This blog is for information purposes only and not to solicit any business or offer any recommendation what so ever to sell or to buy any stock. Please be aware that equity stock investing is a with risk investing including risk on the capital invested. Please take an informed decision.