Tata Group mulls folding food businesses into single company

 

New Delhi, Jul 3: Tata Group, India’s biggest conglomerate, is evaluating a proposal to integrate its food and beverage businesses into a single company, people with knowledge of the matter said. The Mumbai-headquartered group is considering separating the salt and branded lentils businesses of Tata Chemicals Ltd. and folding them into Tata Global Beverages Ltd., according to the people who asked not to be named because the information is private. It’s also weighing merging Tata Coffee Ltd., which owns coffee plantations and tea gardens, with the beverages company, and entering dairy, they said.
The proposal is part of Chairman Natarajan Chandrasekaran’s larger strategy to combine related businesses under a single umbrella to increase efficiency and simplify the conglomerate, which includes more than 100 independent operating companies. In April, the Tata group said it will create a single entity called Tata Aerospace & Defence by merging all allied businesses.
Tata Global Beverages, one of the biggest branded tea sellers in the world, could be renamed to reflect the broader focus on the foods business, the people said. The company sells tea under brands including Tetley and Tata Tea, coffee under Eight O’Clock and bottled water under Himalayan.
Shares of Tata Global Beverages climbed as much as 7.4 percent, their biggest gain since Aug. 16, as of 2:41 p.m. in Mumbai. Tata Coffee surged as much as 18 percent, the most in almost six years. Tata Chemicals rose as much as 3.8 percent. The benchmark S&P BSE Sensex advanced 0.4 percent.
Different Options
Another alternative being considered is consolidating the businesses under Tata Chemicals, two of the people said. The second-largest producer of soda ash in the world, the company also sells salt under the Tata brand name and introduced branded pulses, including black gram and pigeon peas, in 2010.
The group is weighing different options and a final decision hasn’t been made about the units that will be merged and into which company, the people said. A special task force has been formed and has made presentations to the board of Tata Sons Ltd., the group’s holding company, they said.